“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.
UK conveyancing firms and law firms are under ever greater scrutiny to carry out rigorous Anti-Money Laundering (AML) checks, and for good reason. According to Europol, 70% of criminal enterprises now use money laundering techniques to hide their ‘ill-gotten’ gains.
In response, the SRA has massively ‘upped the ante’ in the past 12 months, ramping up desk-based AML compliance assessments, resulting in record fines in 2024. So, the question is, what can you do to ease this burden on your business while ensuring consistent AML compliance when dealing with international clients?
Enhanced AML checks for international clients
One of the main challenges for conveyancers in 2024 is knowing exactly when to carry out enhanced AML checks for international clients and how to do so effectively and efficiently.
Remember, you must complete EDD AML checks when dealing with a customer who is not physically present when carrying out ID checks (e.g. international clients), a ‘Politically Exposed Person’ (PEP) from a high-risk third country identified by the EU, or presents a higher risk of money laundering.
What are the challenges of vetting international clients?
Carrying out AML checks on international clients to the standard required by the SRA and CLC can be especially challenging, because:
- Your staff may never meet the client in person
- There may be language barriers
- Domestic checking processes, services and software may not work for clients in other countries, and
- It can be difficult to establish the Ultimate Business Owner (UBO), the Source of Funds (SOF) or if the person is a PEP or on a sanction list in another country.
Due to these challenges, there is a high risk of wrongly identifying or failing to recognise an individual as a high AML risk.
How can I ease the burden of international AML checks?
Using systems and processes designed for a domestic clientele to deal with international clients is a risk to your business. Easing the burden of international AML checks requires ‘fit for purpose’ systems, processes, and training geared specifically to international clients.
While your staff may be familiar with how to spot AML ‘red flags’ for domestic clients, they must also be trained on how to do this for international clients. Likewise, you must have AML conveyancing processes and workflows for onboarding and the ongoing monitoring of international clients. Remember that not all third-party AML services and software are capable of handling international client AML checks.
Implementing an automated workflow AML solution that can handle both domestic and international clients is key to reducing the administrative burden and AML risk for your business.
Introducing OneSearch AML for International clients
OneSearch International AML with Facial Recognition is a new, easy-to-use technology solution for conveyancers with overseas clients which will easily integrate into your existing systems. OneSearch International AML with Facial Recognition provides:
- A combined digital ID verification and real-time facial recognition capable of dealing with clients in other jurisdictions
- International PEP and sanction screening using real-time information from over 350 datasets, including domestic and international government websites and public transparency projects.
- Adverse media screening
- Law enforcement and Special Interest Person (SIP) screening for international clients and
- Headshots for PEPs sourced from official international government websites to reduce false positives during the PEP screening process.
Final words
Without fit-for-purpose training, processes, and systems to deal with international clients, it is all too easy to miss money laundering red flags and risks, which can lead to fines and serious reputational harm. With OneSearch International AML, you can relax knowing that your firm is meeting its AML regulatory requirements, and any AML risks will be picked up early or at any point throughout the transaction.
Tired of spending hours on Anti-Money Laundering checks?
We’ve all been there. But what if you could streamline the process and get it done in minutes?
In the following video, we’re introducing you to OneSearch AML, your one-stop shop for fast and efficient Anti-Money Laundering checks. We’ll take you step-by-step through the process of adding OneSearch AML to your conveyancing order, and show you exactly what your client will experience during verification.
See how it works in the video below:
Get ready to say goodbye to lengthy AML processes and hello to a smoother conveyancing experience!
We are delighted to launch our new innovative AML check designed to enhance the way property professionals manage compliance and transactional due diligence.
OneSearch AML harnesses market-leading technology and offers conveyancers an up to date Know Your Client checker in the fight against fraud in the sector, all whilst ensuring adherence to recently updated industry standards and guidelines.
Ongoing monitoring
New digital advancements have meant that previous methods of identity verification within the legal setting such as manually checking documents, face-to-face meetings, and waiting for postal deliveries for documents have become outdated. Now, with biometric scanning, NFC technology, secure encryption, and cloud-based storage, ID checks are a far more safe, accurate, and effortless part of the conveyancing process.
Furthermore, OneSearch AML offers ongoing monitoring checks, which provides post-sale examinations of any changes, developments, or updates to customers profiles over a 12-month period.
Robin Wells, Head of Sales Operations at OneSearch added:
“The launch of OneSearch AML underlines our ongoing commitment to empowering conveyancers in navigating their day-to-day workflow, and in this case, support for any complexities that run alongside AML due diligence.
“For us, we know and understand the complexities of KYC regulations of our clients – assessing risks, identifying suspicious activities, and especially ongoing monitoring are all imperative to our customers and to the industry as a whole. OneSearch AML solution delivers quick, secure, and accurate cover across all these areas.”
Challenges in Anti-Money Laundering Compliance
The launch aligns with insights from the SRA’s Anti-Money Laundering annual report, revealed in October 2023, which highlighted certain areas needing attention within law firms. Among the observations, it was noted that a portion of reviewed firms, specifically 66 out of 224, require additional support to fully comply with anti-money laundering regulations. Unfortunately, the legal sector often faces challenges regarding money laundering, contributing to a broader concern around the flow of approximately £100 billion in illicit funds through UK businesses and financial institutions each year.
Elizabeth Jarvis, Managing Director at OneSearch said:
“The message from the SRA annual report was clear. All legal firms need to ensure they are committing time and resources to counteract modern money laundering attempts, and we offer our strongest support with OneSearch AML.
“The service has been created to be the single, comprehensive solution for our customers, easing any worry or burden they may have over how best to comply with all relevant standards and guidelines.”
Are you feeling the weight of Anti-Money Laundering compliance? You’re not alone.
New industry standards and guidelines are adding complexity, and the cost of non-compliance can be significant.
Our new infographic reveals the hidden costs of manual KYC checks, missed deadlines, and non-compliance penalties. You’ll also discover how OneSearch can help you significantly reduce these costs and improve your bottom line.
When carrying out Anti-Money Laundering checks on clients, all regulated industries must identify PEPs and sanctioned individuals during onboarding, to comply with KYC and AML requirements.
In this post, we take a deep dive into what they are, who meets the criteria, and explore best practices for your firm, safeguarding you and your business from any financial or reputational perils.
What is a Politically Exposed Person?
A PEP is an individual who is or has been entrusted within a prominent public institution, making them susceptible to corruption. Under anti-money laundering legislation, if a client is identified as a PEP, enhanced due diligence (EDD) is required.
Who specifically classifies as a Politically Exposed Person?
Overall, the list of PEP individuals includes, but is not limited to, heads of states, heads of governments, ministers, MPs, members of high-level judicial bodies such as high courts, as well as family members and close business associates of all the above.
Based on Money Laundering Regulations and UK Government guidance, PEPs are listed into tiered categories depending on their role. For example, Heads of State and Government would be regarded as Tier 1 while mayors and members of local councils would be Tier 4. Under UK Government guidance the expectation is firms should be identifying Tier 1 & 2 PEPs as a minimum.
My firm has identified a PEP, should we cease working with them?
If your client has been flagged as a PEP, you should apply enhanced due diligence measures to the case. This will differ on a case-by-case basis, but this does not automatically mean you should cease business.
Law society guidance suggests you must:
- Get senior management approval for the business relationship
- Take adequate measures to establish the source of wealth and source of funds
- Closely monitor the business relationship throughout
If you know or suspect a money laundering offence is taking place, you must make a disclosure to your firm’s money laundering reporting officer (MLRO).
What about Sanctions?
In addition to enhanced due diligence, all firms are also required to ensure they are not working with sanctioned individuals.
Sanctions and sanctions lists serve as a critical safeguard against financial crime. Businesses use sanctions checks to prevent themselves from getting involved with sanctioned entities. This way, businesses not only avoid the risk of non-compliance fines but also safeguard their reputation in the process. Conducting both PEP and sanction checks is crucial for businesses to minimize the chances of engaging with high-risk individuals or entities and to maintain a robust due diligence process.
Where I can I find out more?
OneSearch AML empowers you to navigate the complexities of due diligence with ease. Our innovative technology simplifies the onboarding process, saving you valuable time without compromising security.