New laws target land deals for dirty money

SECRETIVE foreign landowners could be forced to reveal their identities under government laws designed to stamp out money laundering, it was claimed last night.

From tomorrow, estate agents, who receive commission on land deals, will have to demand proof of identity before accepting more than 10,000 in cash from customers. They will also have to report wealthy clients "acting suspiciously".

The UK has the second-largest money-laundering market in the world - worth 25bn annually - after the US.

And with the property market rising at up to 20% in some areas, land is seen as the best refuge for illegal gains. Part of the Docklands development in London is believed to have been funded with gold from the Brinks Mat heist.

The national property boom saw twice the normal number of land deals in Scotland last summer.

Currently, more than 370,000 acres of Scotland are owned by just 10 offshore trusts, but the people behind the trusts are often not known.

Now, under the Money Laundering Regulations 2003 Act, staff at estate agents, banks, luxury car dealers and even casinos face jail sentences of up to 14 years if they do not report suspicious payments to the National Criminal Intelligence Service.

Rob Miller, a partner in estate agency Strutt and Parker, which deals with a large number of shooting and fishing estates, said: "Every bank, solicitor, accountant and provider of financial services, including estates agents, are now legally obliged to be informers.

"Staff must always be awake to a transaction that appears peculiar, especially if a large amount of cash or unusual sources are involved. Other warning signs include unusual instructions, suspect countries and people who will not say much about what they do.

"We have to be alert to the possibility that something dodgy might be happening. We will report it via our nominated officer to the National Criminal Intelligence Service.

"If we don’t, it’s a criminal offence, which carries a penalty of up to 14 years in prison, so we are having to take it very seriously. None of us want to get banged up."

Land ownership is kept secret in Britain because of the outdated system of "beneficial ownership", which means registered owners of land and property are under no obligation to enter their true names.

While many legitimate businesspeople own property through offshore trusts, these can also be used by drug-dealers or even terrorist groups such as al-Qaeda to bank their money far from prying eyes.

Miller said estate agents would have to take extensive measures to establish who new owners and sellers were.

"We have to look at their passport and compare their photographs, and their address, and then take a copy of it for our records, which we have to keep for five years.

"If they haven’t got that then a driving licence with photo is needed to establish identity.

"If the property is bought or held by overseas companies then it becomes more complex, and we’d have to take legal advice.

"If they are trustees in their own right, then we will have to establish their credentials. If it is a trust company, then we would have to find some sort of evidence that the company truly exists and where it is based."

Customs and Excise estimate that the proceeds from crime in the UK are between 19bn and 48bn annually, with the amount of money laundered through the legitimate economy at around 25bn.

Yesterday a spokeswoman for the National Criminal Intelligence Service Scotland, said:

"Property is one of the criminals’ favoured means of laundering the profits of illegal activities into ‘clean’ cash.

"Many people use overseas trusts for legitimate reasons, but they mean that ownership often is untraceable. If there is a loss of anonymity, then that is a small price to pay for catching criminals or terrorists."