To help calm the nerves in case you are subject to an AML check, anti-money laundering technology platform, Credas Technologies, has outlined why you may have been flagged and what to do.
What is money laundering?
Money laundering is the process of turning large amounts of ‘dirty money’ - earned through criminal activity - into ‘clean money’ which has the appearance of coming from a legitimate source and cannot be traced back to any illegal actions. It is done by feeding dirty money through a legitimate business and a busy housing market where homes are easily and quickly bought and sold makes the ideal cleansing mechanism for launderers.
The warning signs
Cash only buyers
Cash-only buyers can be very attractive indeed to sellers, promising quick a transaction unfettered by the complexities of a mortgage.
But while being a cash buyer puts you in a strong position within the market, it also increases your chances of coming under a greater degree of AML scrutiny.
It’s vital that you can prove where and how you’ve accumulated the cash and if it’s legitimate, there should be some kind of paper trail that allows you to do this. This is the quickest way in order to alleviate any concerns from an AML standpoint.
Have documents in order and avoid silly mistakes
Criminals who are trying to exploit the housing market will often go out of their way to avoid providing important documents or vital pieces of information, not least those that are used to prove I.D or financial history.
As a buyer or seller, you can find yourself under undue suspicion if you fail to provide the right information in a timely manner. Most of the time, this will be a result of an oversight or silly mistake, so it’s vital to ensure the utmost attention to detail throughout the buying/selling process and to have all your required documentation to hand.
One of the most common oversights is failing to update your documentation from your maiden name when getting married, or with your current address after moving originally.
Be able to answer any ownership questions
Short-term ownership is a common red flag for money laundering. Criminals who are using the market to clean their money do not want to hold on to property for long, so it’s common to see a pattern of buying homes and then quickly selling them again.
That’s why, if you’re selling after only owning for a short period of time, you need to be able to explain the reasons why. Even when you can explain why it might be wise to avoid selling too quickly anyway because many lending institutions will not finance the purchase of properties where the current ownership has lasted less than six months.
Overseas buyers
Buyers from overseas often carry a higher level of laundering risk for UK sellers. That’s why foreign buyers require additional checks and due diligence. If therefore, you’re selling to a buyer from overseas, you’ll need to be more patient than normal.
And if you are an overseas buyer, you’ll also need to be patient but, if you have all of the required documents and information available from the beginning, the process will be greatly expedited.
Tim Barnett, CEO of Credas Technologies, said: “The housing market is exceptionally busy at the moment and so the need to be particularly vigilant of money laundering has never been greater.
"For legitimate buyers, being flagged for an AML check may come as a cause for concern which is only natural, but there is really nothing to worry about.
"HMRC has been tightening the noose around property market money launderers over recent years which means agents have to go to great lengths to ensure no illegal activity is occurring, otherwise they face hefty financial penalties.
"Much like the wider process of purchasing a home, the best approach is to have all your documentation in order so if you do have to undergo an AML check, it can be completed swiftly and you can proceed with your purchase.”
