"Examining consistent account activity patterns can help identify anomalies or sudden inflows of wealth that seem out of character"
- Paul Offley - The Guild of Property Professionals
Paul Offley, Compliance Officer at The Guild of Property Professionals, highlights the importance of robust Anti-Money Laundering checks when property transactions involve funds from alternative sources, such as a child’s account. He cites cases where buyers secure a mortgage for most of the property purchase but rely on funds from other sources, including accounts held by their children, to cover the shortfall.
Offley explains that money launderers often attempt to obscure the origins of their funds. “In the worst-case scenario, a buyer may have engaged in illegal activity and is trying to hide the source of the funds by placing them in a child’s account to avoid suspicion. With this in mind, AML checks must examine children’s accounts just as rigorously as any other account.
“Key factors to consider include the duration the account has been open and its transaction history. For instance, has there been a sudden, unexplained increase in the account balance? A notable example would be an account that has consistently held a £2,000 balance suddenly receiving a £15,000 deposit. This should be flagged, with further investigation into the source of the deposit and who transferred the funds to the child,” he comments.
Offley advises ensuring that funds used for property purchase have been in the account for a reasonable period. “Examining consistent account activity patterns can help identify anomalies or sudden inflows of wealth that seem out of character,” he adds.
Another critical aspect is verifying the buyer’s right to use the funds in the child’s account. “Legally, funds in a child’s account belong to the child, not the parents. A parent may act as a trustee for their child’s account but is only justified in using those funds if it directly benefits the child. For example, purchasing a property where the child will live could be considered in the child’s best interest,” Offley notes.
He suggests that estate agents obtain written confirmation from the buyer’s solicitor confirming the parent’s right to use funds from the child’s account for the property purchase. “This approach serves two purposes: it ensures there is no suspicion of money laundering and confirms the legitimacy of using the child’s funds for the transaction,” Offley explains.
Once the agent has obtained the solicitor’s confirmation, they should document their rationale for proceeding with the purchase. This documentation, along with the solicitor’s confirmation, should be sent to the Money Laundering Reporting Officer for review and approval. This process forms a crucial part of the agent’s due diligence report for the property sale.
