The Money Laundering Regulations (MLR) are designed to protect the UK financial system and put in place certain controls to prevent businesses being used for money laundering by criminals and terrorists.
HMRC has named 68 estate agents that have been fined a total of £519,645 for not complying with rules designed to stop criminals laundering money from illegal activity.
Tax evasion is a criminal offence that can lead to money laundering, for example, the sale price of a property may be set below the Stamp Duty threshold by manipulating the price of furniture and fittings. Tax may also be evaded by hiding behind complex legal structures.
HMRC’s guidance says that money laundering can take many forms, but in the property sector it often involves:
- buying a property asset using the proceeds of crime and selling it on, giving the criminal an apparently legitimate source of funds
- criminals may also hide behind complex company structures and multiple accounts to disguise the real purpose of a transaction and hide its beneficial ownership
- a more direct method may involve paying an estate agent or auctioneer a big deposit and reclaiming it later
- the money for a purchase may be the result of mortgage fraud.