"Property firms should regularly update staff training on the risk around identifying fraud and the red flags of which they should be aware"
With cases of fraud and fake ID documents rising across the property industry, risk management platform Thirdfort is warning property lawyers and agents to be extra vigilant when dealing with specific property types and has published guidance to help prevent property professionals from unwittingly enabling fraud or money laundering.
Criminals will stop at nothing to bypass controls and use many methods to engage in fraud. These include obtaining fake IDs and falsifying documents so their name matches a property owner’s name, and illegally obtaining genuine documents to open a bank account.
Property firms such as conveyancers and estate agents often rely on their staff to manually verify identity documents to complete Know Your Client and Anti-Money Laundering checks, increasing the risk of human error that they may unknowingly enable fraud and money laundering.
Property lawyers and agents working on any of the following eight types of property transactions should be extra vigilant.
Sole or long-established owners: If there is only one or sole owner of a property, it makes it easier for the criminal to steal or fake an ID and impersonate that owner.
Mortgage-free properties: Often, there are fewer checks and hoops to jump through with mortgage-free properties, so criminals see them as easier targets.
Rented property: A tenant may be able to impersonate the owner. They have access to the property and can obtain identification at the address.
Absent landlords: Absent landlords make it easier for fraudsters to obtain the post and impersonate the landlords without their knowledge.
HMLR unregistered properties: There is no registered title and no official record of the legal owners.
Residents in care homes or hospitals: Property fraud is easier to commit as the property may be vacant or its owners are preoccupied with their health or other concerns.
Deceased property owners: If an individual is deceased, it is easier to obtain their identity by impersonating an owner using false or stolen ID.
Property for sale: Fraudsters can pose as potential buyers to enable them to collect information on a property and a seller to facilitate fraud.
Harriet Holmes, AML services manager at Thirdfort, said: “While firms may see individual lawyers and agents as a risk, they are also the best line of defence. Property firms should regularly update staff training on the risk around identifying fraud and the red flags of which they should be aware. It is also worth becoming familiar with government guidance on how to examine ID documents.
“Alongside such training, modern digital verification tools can also help reduce the burden on staff when checking and verifying ID documents. With the right technology, documents can be identified as fraudulent in minutes, giving lawyers and agents time to focus on the red flags that may be more difficult for technology to spot.”
