The legal profession is being urged to maintain vigilance in identifying suspicious activity in property transactions after research indicated a 13% year-on-year decline in the number of Suspicious Activity Reports (SARs) filed by legal and conveyancing professionals.

Sharp Decline in SARs Filed – Law Firms Warned to be Alert 

According to the SARs Annual Statistical Report 2023, the number of SARs submitted by independent legal and conveyancing professionals dropped from 2,859 in the 2021-2022 fiscal year to 2,526 in 2022-2023.

These reports are crucial disclosures made to the National Crime Agency (NCA) when there is suspicion or knowledge of potential money laundering or terrorist financing.

SARs: The Reporting Requirement

The Law Society’s guidance for Money Laundering Reporting Officers (MLROs) emphasises that those working in regulated sectors must submit SARs if they suspect or have reasonable grounds to suspect money laundering.

Despite the high numbers, the reports make up a minuscule percentage when viewed against the total volume of property transactions. In 2021/2022, HMRC data showed 1,376,080 transactions, meaning SARs accounted for a mere 0.2%. This proportion remained consistent in 2022/2023, with 2,526 SARs amidst 1,208,310 transactions.

Common Money Laundering Techniques

Legal professionals are reminded to stay alert to potential red flags and identify suspicious behaviour in property transactions. The most frequently observed techniques used to launder money include:

– Third Party Proxy: Criminals often use proxies to distance themselves from property purchases.

– Irregular Sale Prices: Transactions that deviate significantly from market value could be attempts to launder money via mortgages.

– Obfuscated Sources of Funds: Untraceable cash sources or deposits made by unrelated parties are key indicators.

– Location of the Buyer: Buyers from high-risk territories purchasing properties in unfamiliar regions might be trying to evade authorities.

– Shell Companies and Trusts: These entities can conceal the identities of real buyers, complicating the tracking of illicit funds.

– Cash Transactions: Using large sums of cash makes it harder to trace the origin of funds.

– Related Parties: Repeated transactions between related parties may be a sign of money cycling.

Enhancing AML Compliance through Verify 365

Verify 365 assists law firms in managing the various red flags associated with Anti-Money Laundering (AML) compliance by offering comprehensive technology solutions. Their platform, which features real-time biometric identity verification, enables firms to detect and assess risks like third-party proxies, irregular sale prices, and obfuscated funding sources.

Verify 365 is uniquely positioned as the best AML technology platform for law firms facing the increasing scrutiny and potential fines for Anti-Money Laundering non-compliance by the Solicitors Regulation Authority. As the only AML platform in the world designed by solicitors for solicitors, it offers an unparalleled technology tailored to the specific needs of law firms and estate agents, ensuring compliance while enhancing client onboarding and due diligence processes.

Verify 365 stands out from the competition due to its commitment to security and innovation, with all technology and software developed and maintained in-house in the UK. This ensures the utmost security for client data, stored on highly secure UK servers. The platform’s pioneering biometric and NFC technology, DynamicID, along with compliance from day one with the HM Land Registry Safe Harbour Digital ID standard, underscores its status as a leader in legal tech solutions.

Industry-Wide Guidance

The Law Society, Solicitors Regulation Authority (SRA), and Council for Licensed Conveyancers (CLC) have provided comprehensive anti-money laundering guidelines and toolkits to support legal professionals. All firms must remain alert to suspicious activity and report unusual transactions promptly to maintain integrity in property transactions.