ECSH53125 - General risks in the estate agency business sector
UK property purchases are an attractive method to launder illicit funds due to the large amounts that can be moved through or invested in the sector, and the low levels of transparency of ownership or source of funds. Purchases made by complex corporate structures or trusts based in secrecy jurisdictions, also known as tax havens, pose the greatest level of risk, due to the difficulties in determining the ultimate beneficial owners.
Criminals often purchase properties as long-term investments and to release their criminal funds. The high amounts of money that can be moved in one transaction and the appreciation in value, along with the enjoyment criminals can get from high-end properties, makes them very attractive to criminals. Properties can also be used by criminals to exploit properties for criminal means, such as organised immigration crime and drug trafficking.
Common risks throughout the sector may present as, but are not limited to, the following:
- Super-prime property is considered to be properties that are £5 million or over in London and the Southeast, and £1 million or over elsewhere in the UK. Super-prime properties are attractive to criminal actors as they hold significant economic value without depreciating in the medium-long term and are frequently purchased using complex corporate structures to disguise the purchase from the criminal origins of the funds.
- The number of politically exposed persons (PEPs) involved in super-prime property purchases are disproportionately far higher than in other property deals.
- Residential property sales pose a risk due to the volume of properties sold, customer turnover is higher, the property is easier to sell on, and it can be lived in using criminal funds.
- Commercial property sales may use complex, opaque company structures which are less likely to raise suspicions in the commercial sector than in the residential market.
- Commercial property may be purchased by criminals as premises for cash intensive businesses involved in money laundering or predicate offences, such as human trafficking.
- Use of Special Purpose Vehicles (SPV) to obscure beneficial ownership.
- Profile and behaviour of the customer is not in line with the property transaction.
- Multiple transactions of the same property in a short period of time.
- Customers based in or linked to a High Risk Third Country (HRTC).
- Property transactions with no commercial purpose
- Non-resident customers.
- Use of third-party identity providers, due to the varying level of checks they undertake. It is the business’s responsibility to examine any third-party checks to decide if any/what further action is required, as well as ensuring it meets its obligations under the regulations.
- Use of auctioneers in property transactions, as property transactions involving auctions happen much faster than traditional property transactions.
Terrorist Financing Risk Indicators include:
- Customers linked to proscribed organisations
- Customers sanctioned by the UK for terrorist activity.
- Offshore ownership, intermediary jurisdictions and countries with a high geographical risk of terrorism.
- Proliferation Financing risk indicators include:
- Customers linked to the governments of proliferation financing sanctioned regimes.
- Property being used to manufacture dual use goods.
Further information on risks
More information regarding EAB risks can be found within:
HMRC’s “Understanding risks and taking action: estate agency businesses” document on GOV.UK. Businesses must have taken into account all risk factors in our risk assessment and the NRA when producing their own risk assessment. Officers must read and understand the EAB risk indicators before attending any EAB intervention.
National Risk Assessment 2025.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)