Money laundering through the UK property market is contributing to the growing unaffordability of homeownership in this country, according to new analysis by anti-money laundering and digital compliance specialists, SmartSearch.
The firm estimates that the influx of illicit funds has inflated house prices by an average of £3,000 across the UK—and by more than £11,000 in London alone.
Since 2016, more than £11bn in suspicious wealth has been channelled into UK real estate, with more than half linked to shell companies registered in British Overseas Territories. Currently, over 87,000 properties in England and Wales are owned by anonymous firms based in tax havens, with a total estimated value exceeding £100bn.
Phil Cotter, CEO of SmartSearch said: “The UK property market is one of the most vulnerable sectors to financial crime, because of the high values involved and the ability for companies to buy, own, and sell property with minimal scrutiny.
“This allows criminals to exploit loopholes—like purchasing through anonymous shell companies—to clean their money. These buyers often pay inflated prices to secure quick deals, which in turn distorts the entire market.
“In some prime areas of London, dirty money has inflated prices by up to 20%, pushing first-time buyers and local families out. In boroughs like Westminster and Kensington & Chelsea, offshore buyers have created so-called ‘lights-out streets’, where luxury homes sit empty while local communities suffer.”
According to Cotter, estate agents are the first line of defence in stopping property-related money laundering. But SmartSearch warns that many are falling short of their legal obligations.
Recently, nearly 200 estate agents were fined over £1m for breaches of anti-money laundering (AML) regulations—mostly for trading while unregistered.
Analysis of the HMRC Supervised Business Register4 shows that out of nearly 25,0005 VAT and/or PAYE-based estate agents in the UK:
+ Some 21,578 are currently AML-supervised 1,341 have applied but are still awaiting approval 980 have let their supervision lapse That leaves around 3,400 agents (14%) operating without appropriate oversight.
+ Even among those that are AML registered, more than half (56%) admit they do not always run verification checks on the people controlling business clients—leaving them exposed to front companies. Alarmingly, 3% say they never verify business buyers.
Cotter added: “If estate agents don’t take their anti-money laundering responsibilities seriously, the UK property market will remain a magnet for dirty money. With thousands of agents still unregistered or failing to carry out even basic checks, we’re allowing criminals to distort the market—and its ordinary people who are paying the price.
“We recognise the pressures estate agents are under, which is why we’re committed to helping them navigate AML regulations and protect all involved. These regulations are not a burden, but a vital tool to stop criminals from distorting our market.”
Read the orginal article: https://propertyindustryeye.com/estate-agents-on-the-frontline-in-fight-against-money-laundering/
