Some 37% of estate agents and other property firms experienced financial crime in 2023, jumping from 17% the year before.
The number of property firms (29%) finding themselves prey to financial criminals increased almost five times since 2022, while finance firms falling victim to financial crime more than doubled to a third (14% in 2022), SmartSearch research shows. Martin Cheek, managing director of SmartSearch, and a qualified lawyer, said “as the gatekeepers of the UK’s financial system, regulated firms in these sectors are on the frontline in the ongoing fight against financial crime. As attempts increase and more criminals look to exploit weaknesses to launder money and legitimise illicit funds, regulated firms must remain proactive and ensure their compliance processes are robust enough to withstand such attempts.
For those firms that have already become a victim of money laundering or financial crime, I cannot think of a higher priority this year. As the threat level has risen, many firms have taken the opportunity to implement a digital compliance strategy, utilising the latest technology, along with real-time data to transform this onerous task into a seamless part of client onboarding and ongoing monitoring.”
As criminals continue to become more sophisticated, tools such as electronic verification (EV) and digital platforms such as SmartSearch have grown in popularity.
EV is cited by the 2020 Money Laundering and Terrorist Financing Act as an important safeguard.
Channel 5 investigation exposes huge surge in property fraud
Property ownership is a cornerstone of financial stability for millions of people yet the threat of property fraud remains largely underestimated, says TV show. Channel 5’s TV show ‘Scams: Don’t Get Caught Out’ has revealed a staggering 84% rise of digitally-driven property fraud targeting home owners and landlords.
Stuart Forsdike, Adviser at Title Guardian and founding partner at PCS Legal, joined host Alexis Conran to delve into the mechanics of the crime on Wednesday night.
PROPERTY FRAUD
Throughout the programme Conran shed light on the multifaceted nature of identity theft and property fraud, with Forsdike explaining the devastating threat of title deed fraud that can result in the theft and illicit sale of properties.
Forsdike told the show “fraudsters target your property due to its value. They only need one successful hit to accrue an asset that’s large in value.”
He highlighted how scammers exploit various circumstances, including properties not yet registered with Land Registry, vacant properties and those rented out, before explaining “everyone is a target because anyone can have their ID defrauded, therefore anyone can impersonate being a seller.”
A fraudster may be a rogue tenant or have no connection to a target address. The name, address and mortgage status of a property owner is easily available via HM Land Registry for a nominal fee. Using this information, they can clone the owner’s identity documents to illegitimately transfer property ownership.
FINANCIAL GAIN
Once in control, they can sell the property, take out loans or use it for their own financial gain – all without the legitimate owner’s knowledge until after the crime has been committed.
Mr Forsdike explained “If a landlord lets out a property, there is nothing to stop their tenant going to a lawyer and changing their name officially by deed poll. They would then have a new passport, new driving licence, bank statements, utility bills sent to that property address in their new name, which is the same as the landlord. At this point they can walk into a law firm, pass ID checks, they could go to a selling agent, put the property on the market and effectively sell it. It’s possible because there are no ways to restrict this happening”.
Agents, landlords and tenants warned over ‘latest rental fraud’
Letting agents have been warned to be on the watch out for a new king of rental fraud following a national newspaper investigation. This follows the case of a teacher in London who, after her partner moved out of their rented accommodation, was asked by her letting agency to go through referencing as the original tenancy had been in his name.
She then received a request via email to complete referencing appears to have been phished by a fraudster who sent through a fake referencing request at the right time.
The woman handed over her passport details and other personal information, the Observer newspaper reports. This was then used to take control of her 02 phone and ultimately her bank account, from which some £3,500 was stolen although, after exhaustive conversations with Barclays’ fraud team, this was returned.
REFERENCING CAUTION
Tenants are now being warned to be careful when undergoing referencing via ‘online checks’ and to be wary when their phone inexplicably lose service, as happened in this case, while landlords and agents need to be aware fraudsters are targeting the thousands of tenants who go through referencing every week.
The case has spurred the UK’s biggest digital identity provider, Yoti, to urge the Government to make the use of ‘re-useable, certified ID’ check systems to prevent this kind of fraud by creating a common platform that banks, phone companies and referencing firms can use to verify someone’s identity.
In layman’s terms, these are smartphone apps that require those signing up to prove their identity once through a vigorous document check system, and then enables other organisations like referencing firms or pubs to check a person’s identity without having to do it all again.
This, companies like Yoti argue, would have stopped this latest reported rental fraud.
Robin Tombs, Yoti’s CEO, says he predicts a shift in five years when the UK Government, or the UK’s financial and telecoms regulators, will decide “key financial and telecoms businesses need to change”.