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£1m fine for property fraud

1st February 2017

Property fraud hits the news again with a significant fine metered out to city law firm Mischon de Reya.

The firm was found to be liable for breach of trust after a rogue tenant posing as the owner sold the property and banked the proceeds. The £1m fine is the largest yet.

The fraud follows an increasingly well-trodden path, coming in the wake of another significant case reported on in October of last year which is being reviewed at the court of appeal later this year.

The scam involves identifying and letting un-mortgaged properties where the landlord lives away. The fraudster then assumes the identity of the owner with falsified documentation, before selling the property through another agent and pocketing the proceeds.

Acknowledging the ingenuity of the enterprise a deputy High Court judge accepted the firms involved had acted honestly and innocently in carrying out their respective roles. Mishcon de Reya had insurance to cover the loss suffered in full, and was in a better position than the client to face the consequences. The judge added the ‘only practical remedy’ open to the client was to target the City firm.

Changes to the Money Laundering Regulations due Summer 2017 are anticipated to place a responsibility on all parties involved in a transaction to take a more rounded approach to identity fraud. The existing regulatory framework fails to provide a complete overview of a transaction with agents and solicitors independently checking their respective clients only.

The implementation of the 4th Money Laundering Directive from June 2017 it is likely to require agents to undertake checks on both vendors and buyers to provide more transparency. In October of last year the NAEA gave their strongest indication that “in all likelihood it (the 4th Money Laundering Directive) will include vendors and buyers, as well as landlords and tenants.”

 

 

Compliance in a Box from Landmark Estate Agency Services is a pay as you go service that provides online AML checks, training for your staff, and storage for your records for the mandatory 5 years. We are also able to identify individuals on government sanctions lists and Politically Exposed Persons (PEPs). Through one easy to use online portal you can standardise your AML processes across your business. Sign up below to try Compliance in a Box FREE on your first 3 properties.

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