Fraud in conveyancing transactions

The Court of Appeal judgment in the P&P and Dreamvar cases raised concerns about fraud in conveyancing transactions.

This is a reminder of the things you may want to consider to help identify and prevent a fraudulent transaction from taking place:

• You should carry out appropriate client due diligence (CDD) and Know Your Client (KYC) checks in accordance with the CLC Anti-Money Laundering and Counter-Terrorist Financing Code and Guidance.
• Be aware of red flags and know what to do if you have any suspicions regarding your client, the other party or the transaction. See more about AML here.
• The Legal Sector Anti-money laundering guidance contains information about the enhanced due diligence required if you don’t meet the client face to face.
• HM Land Registry: Practice guide 67: evidence of identity explains when confirmation of identity or rule 17 identity evidence is required and how it should be given.
• Ensure you have verified the other side’s conveyancer – check that they are legitimate and regulated by the CLC or the SRA by checking the practice’s secure badge or appropriate registers.
• Review or develop a policy to establish:
  • when you might ask the seller’s conveyancer questions where there are indicators of potential fraud. Note: if you raise questions but fail to obtain adequate responses, you may be exposed to additional risk.
  • when and how you will answer questions from the buyer’s conveyancer when acting for a seller.
  • when you should decline to act if you are not confident that the seller is the registered proprietor.
• Make your client aware of the possibility of fraud and suggest they make their own enquiries of the property and the seller, for example by talking to the neighbours.
• Suggest to your client that they sign up to the HM Land Registry Property Alert Service. It is a free service that alerts the registered owner when certain activity occurs on the property register.

Nic Taggart of Landmark Chambers has written a helpful article discussing the implications of Dreamvar. You can read the article here.

Last reviewed: February 2019