Global AML Trends: Key Considerations for UK Conveyancers

Global trends are driving increased focus on anti-money laundering (AML) and counter-terrorism financing (CTF) across industries, including real estate and therefore conveyancing. Conveyancers, as gatekeepers to property transactions, must stay ahead of emerging risks and regulatory requirements to ensure compliance and protect their businesses.

Geopolitical Turmoil

Sanctions and Their Impact on Financial Systems

Sanctions have become an increasingly complex area for UK property professionals. Following the Russian invasion of Ukraine in 2022, the UK government, in coordination with international allies, imposed extensive sanctions targeting individuals, businesses, and assets linked to the Russian regime. Similarly, global sanctions were renewed in response to the Hamas attacks on Israel in 2023.

For conveyancers, this means heightened due diligence is required when dealing with overseas clients, particularly those from high-risk jurisdictions. Ensuring compliance with the UK sanctions regime is critical to avoid financial penalties and reputational damage. Robust client screening, including checking the UK sanctions list, should be an integral part of conveyancers’ AML processes.

High Net Worth Individual (HNWI) Migration

Money Movement from Autocratic Regimes

 The migration of wealth from politically unstable regions continues to shape the UK property market. According to Henley & Partners, over 122,000 high-net-worth individuals (HNWIs) relocated globally in 2023. While the UK remains a desirable destination for those seeking economic and political stability, conveyancers must exercise caution when dealing with HNWI clients.

While many HNWIs have legitimate sources of wealth, some funds may be linked to corruption, tax evasion, or other illicit activities. Enhanced due diligence, including thorough source-of-funds and source-of-wealth checks, should be standard practice to mitigate these risks.

Organised Crime

A Growing Threat to the Property Market

INTERPOL’s 2022 Global Crime Trend Report identified organised crime as one of the most significant global threats. Criminal networks continue to exploit real estate markets, using high-value transactions to launder illicit funds.

The UK’s National Crime Agency (NCA) has consistently warned that property transactions are a prime target for money laundering. Criminals exploit the market by purchasing high-value properties to legitimise illicit funds, often using complex ownership structures and offshore entities to conceal beneficial ownership.

Conveyancers must be vigilant for red flags such as rapid cash transactions, unusual payment structures, or clients reluctant to provide information. Implementing a risk-based approach to AML compliance, including ongoing monitoring and reporting suspicious activity to the NCA, is essential to prevent property-related financial crime.

Sophistication in Money Laundering

Emerging Techniques and Technology

Criminals are increasingly using sophisticated techniques to bypass AML controls. The rise of deepfake technology, synthetic identities, and generative AI poses new challenges for verifying client identities. These tools enable criminals to forge documents, manipulate biometric data, and deceive AML systems.

UK conveyancers must adopt advanced identity verification solutions and stay informed about emerging threats. Leveraging biometric verification, AI-driven fraud detection, and enhanced transaction monitoring can help safeguard against these evolving risks.

The Resilience of Cryptocurrency

A Favourite Tool for Criminals

Despite regulatory scrutiny, cryptocurrency remains a favoured tool for laundering illicit funds due to its anonymity and decentralisation. Chainalysis reported that illicit cryptocurrency transactions reached nearly $23.8 billion in 2022, a significant increase from previous years.

Conveyancers should be aware of the risks associated with crypto-linked property transactions. Clients using cryptocurrency to fund purchases should be subject to additional scrutiny, with clear documentation of how funds were acquired and converted into fiat currency. Implementing specific AML controls for crypto transactions can help mitigate the risk of inadvertently facilitating financial crime.

Conclusion

As global AML trends continue to evolve, UK conveyancers must remain proactive in adapting to new challenges. Enhanced due diligence, ongoing risk assessment, and the adoption of cutting-edge AML technology are critical in maintaining compliance and protecting the integrity of the UK property market. By staying informed and implementing robust AML measures, conveyancers can play a crucial role in preventing financial crime within the industry.