With around £90m worth of money being laundered through the UK in any one particular year, Lucra Mortgages director Michael Aldridge says it is the job of brokers, estate agents, lawyers and lenders to all play their part as the property sector is at the forefront. 

Aldridge’s comments come after the Financial Conduct Authority (FCA) fined 68 estate agents a total of £519,645 for not complying with rules designed to stop criminals from laundering money from illegal activity. 

The FCA also fined Gatehouse Bank £1.5m for “significant weakness” in its financial crime systems and controls.

This applies to periods between June 2014 and July 2017, where the bank was found to have not carried out sufficient checks on its customers based in countries with higher risks of money laundering and terrorist financing.

Speaking on the latest episode of Knowledge Bank’s Lenders Live, Aldridge says: “It is disappointing when you are doing what is required when others aren’t, particularly if you are an individual firm.”

“What happened with Gatehouse is quite shocking given that they are a bank and in theory, they should be on top of this the most. It’s good to see that they have got their house in order now.”

Looking at estate agents, Aldridge says: “They can’t abdicate responsibility elsewhere, they too need to do their bit. They might be looking to others to make sure they cover it off and while there is no money laundering passport for the property industry, they do still need to do their bit. I don’t think some of the estate agents that were fined were even registered, so we need tighter controls and regulations on that part.”

Rather than money laundering checks being a tick-box exercise, he explains that “you should have annual money laundering training into what you’re looking out for in terms of criminal or suspicious activity”. 

“These things are fundamental and we should all be reminded regularly as to why we’re doing this rather than it being a tick-box exercise,” he adds. 

SmartSearch managing director Martin Cheek described the FCA’s fine on Gatehouse as a “significant ruling”.

Speaking separately at the time of the FCA’s announcement, Cheek says: “Despite acknowledging that the bank’s exposure to risk was not deliberate, the regulator still imposed a substantial fine, saying there were no excuses for serious failures.”

“This serves as a sharp reminder to all financial organisations that unintentionally breaching the rules is not a defence. The fines and reputational damage were still meted out. And, had the bank not settled early in the investigation, the amount would have been £2.2m.”

“The bank also failed to carry out the correct checks on customers classed as politically exposed persons (PEPs). With thousands of individuals and entities added to sanctions lists this year, this shortcoming underlines the difficulty of verifying clients – new and existing – in an ever-changing sanctions landscape.”

“Electronic verification is the only robust way for financial firms like Gatehouse to identify new customers and monitor existing ones as well as provide evidence of a robust sanctions screening process.”

Also speaking on this week’s Lender’s Live, Movin Legal key relationships director Emma Hall says: “The way the industry has gone post-credit crunch, it is down on the lawyer, to a point because they are there to check it for the client and for the lender.”

As the estate agent world is not a regulated sector like the financial services sector is, Hall says it “passes the book along the chain, and it falls with the lawyer and their PI insurance”.

However, Hall suggests there is “a lot of work in the background to fix this”. 

“There’s a lot that Mr and Mrs Bloggs buying their property can do to help with money laundering upfront that will be readily available for the lawyer, lender and broker, which is going to improve the problem that we do have at the moment.”

“It does have to go through government and at the moment, we can’t keep the housing minister, we can’t keep the Levelling Up Committee, which means every time that we get two steps forwards, we go one step back.”

“There are plans and there is a very simple solution in place to fix this, but we need the government to be in place and productive to fix it.”

Castle Trust Bank commercial director Anna Lewis suggests it comes down to the controls that companies have in place. 

Lewis explains: “The controls and responsibility starts with everybody, even new starters. It’s important for new people coming into the industry to make sure that they are aware of AML and suspicious activity.”

“There are lots of training modules that we do with staff but it’s about everybody taking their own responsibility,” she adds.