BrickCoin — how UK property is one of the world’s great money laundromats
Here’s the anti-money laundering guidance provided to chartered surveyors handling property transactions in the UK when the funds for a purchase arrive from overseas:
Money which originates from an EU or European Economic Area jurisdiction is regarded as coming from a trusted source because the funds, and the bank which holds them, will have been subject to a number of European Union directives which have to be adhered to subject to legal penalty. The European Economic Area includes the EU and Iceland, Lichtenstein, Norway and Switzerland (through various bilateral agreements).
The same cannot be assumed for money originating from non-EU sources. Because it is not subject to the same directives it is likely to be regarded with more suspicion which explains why solicitors require additional proof of the source of funds to satisfy their own Money Laundering Policies. There are certain high risk jurisdictions (countries) from which solicitors will be unable to accept funds, either directly or indirectly.
Just in case you missed it let me highlight the key sentence:
Money which originates from an EU or European Economic Area jurisdiction is regarded as coming from a trusted source because the funds, and the bank which holds them, will have been subject to a number of European Union directives which have to be adhered to subject to legal penalty.
There’s so many to pick from, but let’s go with this one:
…The main reason for the delay is a scandal in which it’s alleged that more than $9bn in mostly Russian money was laundered through Danske Bank between 2007 and 2015, the people said. The scale of the potential breaches is so huge that Danish politicians now want their original proposal to be much tougher, they said. Cabinet is also spending more time figuring out how to calculate fines and how big penalties can be, one of the people said….
This is just the tip of the iceberg to be honest. EU banks are suspected of being involved in laundering between $20–80bn of funds out of Russia between 2010–2014.
Obviously, not all that money ended up in UK property, but you have to be pretty dumb not to realise the attractiveness of the asset class to dirty money (and grey money).
This is unlikely to ever make it into the mainstream because there’s too many vested interests, but if you ever wondered why entire apartment complexes stand empty in towns like Birmingham, Manchester or London whilst there’s apparently an insatiable demand it’s not hard to join the dots.
(h/t to Paul Lavin for the headline)