OPINION: Anti-Money Laundering: Why Are Home Builders Treated Differently Than Real Estate Agents?


Tim Barnett is CEO of Credas – an anti-money laundering technology platform – and he asks a very pertinent question. Why don’t home builders have the same obligations as real estate agents when it comes to anti-money laundering checks?

Over 1.5 million homes come up for sale in the UK each year and potential sellers of each all require anti-money laundering checks – there is often more than one check per property in the case of a condominium.

As of June 2017, property buyers, at the time an offer is accepted, are also required to provide identification for the purposes of the agent carrying out these checks. Not to mention the doubling of checks by legal representatives at each sale and purchase.

The consequence of regulation, therefore, is that many more AML checks are carried out each year than actual sales transactions – millions more.

In other words, the government, in all its wisdom, is taking the issue of clean money for real estate purposes rather seriously and no more than in the face of growing terrorist threats, organized criminal activity and sanctions against those who are linked to diets that do bad things. .

And so it’s harder these days to clean up your bad cash flow through the real estate industry and as AML technology continues to improve and the government tightens the rules even more like they seem set to do, the perspective that “bad guys” are using this industry to clean up their ill-gotten gains are dwindling and we can all hold our heads up high as not being complicit in such activities.

Except for one glaring anomaly – actually 209,393 of them.

Because, did you know that of all the new homes built and sold each year in the UK, none are subject to anti-money laundering checks by the builder who sells them?

Yes, every buyer’s lawyers will do their AML checks I’m sure, but doesn’t this two-tier system make you wonder why, if homebuilders are exempt, real estate agents are forced to bear their own AML load?

The government can’t have it both ways – it’s either material at the point of sale and purchase as in the case of realtor listings and offers, or it isn’t – as apparently in the case new real estate developers.

In the last 12 month period for which figures are available and based on CPEs issued to new homes, this represents 209,393 money laundering opportunities through the system.

Worse is not fair almost a quarter of a million loopholes, but loopholes that are worth an average of £367,200 a time. This creates a frankly astonishing and totally unacceptable £76.9 billion gap in money laundering opportunities for criminal gangs, ISIS, sanctioned oligarchs and others.

I find it incredible that the UK government has allowed this gaping chasm of illicit funds to remain open.

Our research suggests that Britain is the second most prolific country on the planet for money laundering activity. It is estimated that £87.9 billion of dodgy money is filtered through the UK each year, just behind the US, which tops the charts with a staggering £216 billion.

Considering proportionally the estimated amount of cash laundered in each country as a factor of GDP, Britain, with 4.3% of GDP, is fourth in the rankings behind Belgium, Luxembourg and Israel.

I humbly suggest that politicians might resolve to bridge this new disparity in the housing sector if we as a nation want to be able to stand tall among others on the world stage rather than looking like a nation that does not apparently doesn’t care much about these things. at all.

Sounds too easy to do, doesn’t it?


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