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.

In the ever-evolving world of Anti-Money Laundering (AML), ongoing monitoring plays a crucial role in mitigating risks and ensuring compliance. This is especially true in the realm of conveyancing, where large sums of money are changing hands.

This coffee-break article aims to shed light on ongoing monitoring in AML for conveyancing within England and Wales.

What is ongoing monitoring in AML for conveyancing?

Ongoing monitoring is the continuous process of identifying, assessing, and mitigating money laundering risks throughout the conveyancing transaction. It involves regular reviews of customer due diligence, monitoring transactions for suspicious activity, and reporting any concerns to the authorities.

How often should ongoing monitoring be done?

There’s no one-size-fits-all answer to how often or how long you need to monitor your customers’ activity. Instead, regulations require ‘ongoing monitoring’ that adapts to each business relationship. This means regularly checking conveyancing transactions (and sometimes, where necessary, the source of funds) to see if they match your understanding of the customer, their business, and their risk level. Basically, the higher the risk, the deeper your ongoing monitoring should be.

We empower you to customize your monitoring for each customer, allowing you to focus on those who pose the highest risk.

When should ongoing monitoring take place?

Ongoing monitoring for AML in UK conveyancing should ideally happen throughout the entire client relationship, not just at the beginning.

Here are some key points to consider:

  • Continual Basis: The Law Society recommends a system of file reviews or reminders to ensure ongoing monitoring is applied
  • High-Risk Clients: All clients should be monitored, but those identified as high-risk require enhanced due diligence and more frequent monitoring
  • Trigger Events: Specific situations can trigger the need for additional CDD checks, which essentially act as a form of ongoing monitoring. (Change of name, inconsistent transactions, reluctance to meet in person)

Why is ongoing monitoring important in conveyancing?

Conveyancing deals are particularly susceptible to money laundering due to the high transaction values and the involvement of various parties. Ongoing monitoring helps to:

  • Identify suspicious activity: By regularly reviewing transactions and customer information, red flags like large cash payments, unusual source of funds, or inconsistencies can be identified and investigated
  • Mitigate risks: Early detection of suspicious activity allows for taking timely action, such as seeking clarification from the customer, refusing the transaction, or reporting to the authorities
  • Demonstrating compliance: Robust ongoing monitoring demonstrates to regulators that firms are taking AML obligations seriously and have measures in place to combat financial crime

How can I implement ongoing monitoring in my conveyancing practice?

Here are some steps you can take:

  • Develop a risk assessment: Identify the ML risks specific to your practice and tailor your monitoring procedures accordingly
  • Train your staff: Ensure your staff is aware of their AML obligations and how to identify and report suspicious activity
  • Use technology: Consider using technology solutions to automate some aspects of monitoring, such as transaction monitoring and sanctions screening
  • Seek professional advice: Consult with an AML expert for guidance on implementing effective monitoring procedures

What are some resources available to help me with ongoing monitoring / AML?

Remote ID Verification is a method of confirming the identities of individuals such as clients or customers who are not physically present. Whereas antiquated methods of confirming identity required persons to be in the room as well as providing documents, the advancements of technology have meant authentication processes can now be carried out anywhere in the world.

In this blog, we’ll take a closer look at a faster, more accurate and more secure form of identity verification, and break down what each component is, and how they all add up to make the AML biometric verification process so much easier.

It starts with liveness detection…

What is liveness detection?

In remote identity verification the use of liveness detection is critical in preventing presentation attacks or “spoofs”. Essentially, it is to make sure the individual carrying out the test is a) real, and b) who they say they are.

Common spoofs include:

  • Masks
  • Photographs or digital prints
  • Digital screens
  • Video playbacks

There are two forms of liveness detection; Active and Passive.

  1. Active Liveness, where a user is instructed to perform an action, such as blink, move your head from side to side, or smile.
  2. Passive liveness works unnoticed in the background without requiring any additional steps from the user. It includes use of AI technology and deep neural networks to detect spoofs.

As passive liveness requires no response from the user, it is often the case that they occur without the user being aware a liveness check is taking place, let alone what security mechanism is being used. This reduces the risk of fraudulent access and identity theft.

What other examples are there in life of passive lifeless tests?

You may start noticing passive liveness tests in more and more in everyday activities, from airport security to mortgage applications.

  • Facial recognition systems: Banks, airports, border control, and other security-sensitive applications
  • Remote document verification: Online onboarding for financial services, healthcare, and other sectors
  • Mobile authentication: Secure access to mobile apps and accounts

Passive liveness is a rapidly evolving technology with the potential to significantly enhance security and convenience in various applications.

Methods:

  • Document verification: Uploading scans or photos of government-issued IDs and comparing them to official databases
  • Facial recognition: Using a webcam or smartphone camera to capture a live image of the person and comparing it to the photo on their ID
  • Knowledge-based authentication: Asking the person security questions based on information they are likely to know
  • Third-party data verification: Checking the person’s information against public or private databases, with their consent

As the housing market and economic outlook continues to fluctuate the cash buyer market sector recently hit an eight-year high.

More and more non-mortgage clients are entering the market looking to secure their next short or long-term investment, and each one has the sought-after incentive of being chain-free, and good to go. 

This this blog, we take a deep dive into the current Cash Buyer Landscape, by pitching questions to OneSearch’s head of Sales, Robin Wells…

  1. With current economic trends around higher interest rates and low availability of mortgages, have cash purchases increased? 

It goes without saying the property sector has taken, and is still taking an unprecedented number of hits, with the initial challenges stemming from the wake of the pandemic. But our resilient market has been further tested by the war in Ukraine and the subsequent cost of living crisis together consistent interest rate increases over the last 12 months.  

I think it’s important to understand that cash purchasers and purchases have always been prevalent in our marketplace, but naturally these transactions will inevitably increase when the sale of property (especially) distressed sales become more frequent and mortgaged buyers less plentiful. 

  1. Without the need for a lender, and therefore searches not strictly being required, should cash buyers look to protect themselves? 

It’s critically important to understand that searches play a vital role in a property transaction and whatever the circumstances a full range of searches as advised by a conveyancer is always the best way to get all the property information required to make an informed decision. However, some cash purchases are negotiated by buyer and seller and the timescales of search delivery can fall out of these agreed parameters, so some form alternative safeguard maybe required to enable the purchase to proceed. 

  1. How can conveyancers help prospective cash buyers reduce the risks involved with a cash purchase? 

As stated before, a full suite of searches is the first and foremost the best way of providing clients the property intelligence required to transact safely. However, when a lender is not present within the transaction, a suitable insurance policy can be obtained to protect the buyer from any loss of property value or claims that may arise from not taking usual route of ordering a full search pack and the missing data within the searches not being present. 

  1. Is there a more robust way to increase the cash buyers due diligence as opposed to just insurance? 

Yes, our Cash Buyer Express is a combined solution that provides some really useful property search data, such as Planning information and planning permissions, nearby road schemes, road and railway schemes, and this is nicely wrapped up with a really robust insurance policy that adds a greater layer of cover for the buyer.  

With all these barriers bypassed, wouldn’t it be good to have an added layer of protection and security without jeopardising a speedy transaction? Our infographic highlights the routes available to your clients, and how OneSearch’s Cash Buyer Express gives your clients the best of both worlds.  

Often described as one of life’s more stressful events, the process of buying and moving into a new home can be made even more frustrating with unexpected curveballs, such as gazumping.

This five-minute read is designed to help you and your client understand the divisive tactic, as well as ways to keep the conveyancing process on track and prevent one less house buying headache.

  1. What is gazumping?
    “One particularly painful gazumping came when our offer had been accepted and then someone swooped in with £80,000 more than us and the seller quite understandably switched buyers.”
    Gazumping is when the seller, who has already verbally agreed one offer subsequently accepts a higher amount from another.
    On paper, the house buying process is uncomplicated: a potential buyer finds a property for sale, arranges a viewing, and puts in a verbal offer. This gets accepted, and the process can move along the stages.
    However, it’s rarely that straightforward; the local area may be subject to increasing demand, or on a wider scale, a housing shortage may mean the market leans more in favour of the seller. This means a) they’ll be a lot more potential buyers hunting for homes, and b) some may be able to bid higher amounts.
  2. Is it legal?
    Frustratingly for buyers, it is legal. If a legitimate bid is put forward on a house listed for sale, there is a legal obligation for the vendor to be made aware of it.
    This is possible because verbal agreements are not legally binding. Once it becomes a written agreement, the sale can be enforced.
    However, the process of preparing contracts takes time, and often won’t be until surveys and checks are carried out, at a cost to the potential buyer.
  3. Can it happen in reverse?
    It can: gazundering occurs when a buyer waits until a sale is almost complete before withdrawing their first offer and making a lower one.
    This tactic may be used to call the bluff of the seller: accept the new amount or risk a loss of a sale, or worse, collapse an entire chain of property sales.
    Whilst previous thought as the less common tactic of the two, In August 2022 claims were reporting that gazundering was occurring as regularly as once in every two transactions.
  4. What does gazumping mean for my clients?
    The decision that follows a gazumping is the hardest for the buyer: match or better the increased offer or walk away. The latter may come at a cost if non-refundable fees for searches have been processed, or worse – they have agreed the sale of their current house or given notice to leave rented accommodation.
  5. What can be done to prevent gazumping?
    There are methods that can be put in place at the start of the journey to buy, such as arranging a mortgage in principle, or working with a mortgage advisor or broker. These are designed to speed up the buying process, allowing for less time for any gazumping.

    For our clients, we offer OneSearch Pledge: a warranty product that, if purchased along with your other search products from OneSearch, means we will reimburse search costs up to a maximum of £300 if the purchase of a new property falls through because of any of the reasons listed within our terms*.
  • To learn more about OneSearch Pledge, and to see the full terms, you can download the product card here, alternatively or you can email intro@onesearchdirect.co.uk or call 01782 433270.

N.B. OneSearch Pledge is not an insurance product. It is a warranty add-on provided with a bundle of searches purchased from OneSearch Direct. The cost of purchasing this product will not be included in any reimbursement. Only products included in the same order as OneSearch Pledge will be covered under these terms, and to a maximum value of £300.

As the risk surrounding identity fraud and money laundering evolves, so too does the technology used to fight it. The introduction of a new industry benchmark from HM Land Registry has pulled ID verification into the 21st century.

This quick five-minute read will get you up to speed with this new Anti-Money Laundering touchstone, and the technology which has made it possible, detailing why its adoption can be of huge benefit for law firms and conveyancers dealing with AML.

What is the HM Land Registry Digital ID Standard?

In March 2021, HM Land Registry presented new guidance for a higher standard of identity verification within the industry.

This new benchmark encouraged the use of both biometric and cryptographic technology checks, which would offer a greater level of fraud prevention, as well as enhancing efficiency and convenience during client onboarding.

Upon conducting these checks, the conveyancer would have reached ‘Safe Harbour’ status for that case.

Why was it brought in?

“The current processes in conveyancing do not feel very 21st century and they have proved difficult to maintain in the current crisis. What can we do about it?”

Mike Harlow, Deputy Chief Executive and Director of Customer and Strategy

A Land Registry blog post from May 2020 raised concerns around fraud prevention and identity checking practices within the industry.

The article spoke of the “inconvenience and inconsistency” of outdated, manual verification methods which relied on the variable factor of human ability, compared to the more modern electronic passport checking methods.

Fuelled in part by the COVID pandemic, embracing these modern methods would not only greatly reduce the need for face-to-face meetings, but allow the conveyancer to complete checks in a more efficient, convenient way.

What is Safe Harbour?

If solicitors and conveyancers adopt and adhere to these new guidelines, either for residential or commercial transactions, HMLR will consider them to have “taken reasonable steps” to verify customer identities, and they would have reached Safe Harbour.

This means that HMLR would not seek recourse against the conveyancer should the identity of their client confirmed later in the process to be inaccurate.

How do you reach Safe Harbour status?

The three stages are:

  1. Obtaining evidence from the client
  2. Checking the validity of the evidence
  3. Matching the identity to the evidence

A fourth requirement is an additional check to be carried out by the conveyancer who represents a transferor, borrower, or lessor in the transaction.

What are the benefits to law firms?

Embracing this new yardstick of verification can provide an efficient, cost effective, and reliable approach to legally verifying if a person is genuine when buying or selling properties. Advances in technology such as NFC in smartphones speed up the process, whilst AI authenticity checks can spot fake documents with fast and reliable ease. With these advances bringing peace of mind to a once problematic area of conveyancing, it’s understandable why these guidelines are being adopted in many law practices.