Only 1 in 300 property purchases by overseas cash buyers are triggering red flags with the National Crime Agency (NCA) in a wake up call for the UK property market, anti-money laundering (AML) specialists Fortytwo Data warned today.
In the US, a similar jurisdiction to the UK, 5 per cent of home sales are to overseas buyers and 44 per cent of them pay cash according to latest figures.
Transposing this trend data onto the UK property market means 26,400 homes are sold each year to overseas cash buyers in Britain, where 1.2m property transactions were the subject of only 355 Suspicious Activity Reports (SARs) in the year to March 2016.
SARs are red flags sent by financial institutions, law firms and estate agents to the National Crime Agency (NCA) when they detect suspicious activity. It comes against a backdrop of widespread fears that foreign criminals have been using the UK property market to store their ill gotten gains.
Fortytwo Data’s knowledge of the anti-money laundering sector suggests direct overseas transactions are responsible for around a quarter of SARs raised in the UK. This means only 0.33 per cent of cash purchases by overseas buyers are triggering alerts – 1 in every 300 sales.
Estate agents’ reporting responsibilities have been strengthened by the latest EU money laundering directive (4AMLD).
The NCA’s director of the economic crime command, Donald Toon, has offered insights in the past on the scale of the problem, revealing how he believes “the London property market has been skewed by laundered money”.
The number of SARs submitted by estate agents to the NCA climbed dramatically in 2015/16, rising 98.3 per cent in only a year albeit from a very low base. It was the highest rise of any sector, which suggests lack of awareness and training in the past has been a problem.
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