What is the Safe Harbour Standard?

“Safe Harbour.” We hear this term thrown around in conveyancing teams a lot, but what does it really mean? And is it something you have to do?

Over the years, property fraud has become quite the headache for conveyancers. Fraudsters have been selling properties they don’t own, running off with the cash, and leaving buyers high and dry. The Solicitors Regulation Authority even flagged vendor fraud as an emerging risk in its latest AML Sectoral Risk Assessment.

Naturally, after case law like Dreamvar, lawyers are pretty nervous about getting it wrong. It’s the case that changed the liabilities and responsibilities of lawyers and conveyancers when dealing with residential property transactions. For those who aren’t familiar with the specifics of the case of Dreamvar, here’s what happened…

A fraudster managed to sell a London property worth around £1 million by impersonating the real seller. After the sale, the fraudster (and the money) disappeared into thin air. Fortunately, the Land Registry caught the fraud when the transfer documents came through, so the title never changed hands.

But poor Dreamvar was left with no property and no cash, so they took legal action against their solicitors, alleging negligence and breach of trust. They also sued the fraudster’s solicitor for failing to spot the fraud. Initially, only Dreamvar’s solicitor was found liable, which seemed harsh to many, as the fraudster’s solicitor hadn’t done enough to verify their client’s identity under Money Laundering Regulations (MLR).

The case eventually made its way to the Court of Appeal. There, the judge determined that the solicitors representing the fraudulent property seller should also shoulder some responsibility alongside those representing the deceived buyer for any incurred losses.

Following this, the Law Society updated its Conveyancing Protocol. Now, if you’re acting for the seller (especially if you’re a Conveyancing Quality Scheme (CQS) firm), you need to:

• request details of the bank account for the sale proceeds and
• obtain evidence that the account belongs to the seller, showing that they have had and been using the account for at least 12 months and
• confirm proceeds will only go to that account

This is a great way to ensure the purchase funds are going to the correct person! But let’s face it, fraudsters are still out there trying their luck. Take the case of a Vicar in 2021, who came home to find his house gutted and the locks changed. Someone had stolen his identity and sold his home – and this time, the Land Registry approved the title transfer. It took him two years of legal battles to get his house back!

Safe Harbour protects conveyancers who might unknowingly get caught up in a fraudulent transfer, as the Land Registry won’t hold them liable. The aim is that, by applying the Safe Harbour standard properly, you’ll spot a fraudulent seller right from the start.

This is an excerpt of a guest article written by Kayleigh Smale, of Smale Compliance. To continue reading on the Safe Harbour Standard and its potential implications for your business, you can download our detailed guide: Mastering AML compliance in 2025, which is additionally packed with in-depth analysis and actionable information designed to help you navigate the world of Anti-Money Laundering effectively.