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Anti-money laundering red flags in conveyancing transactions

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Potential red flag indicators

It is important to be aware of, and act properly upon, red flags that cause you to have suspicions about a transaction.

One red flag indicator may provide a basis for making further enquiries of your client. Several red flags together, without reasonable explanation, are more likely to provide grounds for suspicion.

Your practice should have appropriate risk assessments and policies to identify red flags.

You should consider carrying out additional checks and enquiries to resolve your concerns so that you are comfortable in continuing to act. If you do decide to continue to act, you should document your decision-making including what additional enquiries you have made.

If you still have suspicions, you should refer the matter to your practice’s Money Laundering Reporting Officer (MLRO) and they will determine whether a Suspicious Activity Report (SAR) needs to be filed with the National Crime Agency (NCA).

To view this as a pdf click here.

Business source

  • Unusual introducer.
  • The client is not local to you and there is no reasonable explanation as to why your practice has been chosen.

Client Characteristics

  • Remote client (email contact only).
  • Recently issued ID documents.
  • Proximity of a signatory to the witness – if there is a distance, why?
  • Change of conveyancer without reasonable explanation.

Seller Characteristics

  • Absent owner or landlord.
  • Sole proprietor.
  • Owner/seller living abroad.
  • Lack of knowledge about the property.
  • Long-time owners (high equity).
  • Where the seller lives at a different address from the property and has no documentary evidence such as bills or buildings insurance linking the seller to the property.

Property Characteristics

  • Empty.
  • Tenanted.
  • Unencumbered (no mortgage).
  • High value.
  • Unregistered.
  • No restrictions on the register.
  • Low value without a reasonable and verified explanation.

Transaction characteristics

  • Quick sale required.
  • Back to back transactions (with property rapidly changing value).
  • Funds going abroad or to an unusual destination.
  • End of chain transaction.
  • Large cash payments.
  • Use of virtual currencies.

This list is not intended to be a tick-box exercise nor is it exhaustive. It aims to provide guidance as to what issues or circumstances may suggest a greater risk of money laundering taking place.

With thanks to the Society of Licensed Conveyancers and the Bold Legal Group for their contribution.

Last reviewed: July 2018

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