With Russia yesterday launching a full-scale invasion into Ukraine, it’s likely that the UK and other Western countries will announce further sanctions against the country and people with known links to Russian president Vladimir Putin.
However, how hard these sanctions will hit Russia remains to be seen as the UK property market is ‘a hotbed of Russian money laundering’.
Here, Richard McCall, chief executive and co-founder at Open Banking experts Armalytix, explores how Open Banking could help solve the UK’s long-established money laundering problem – which is at its most rife in London.
“In light of Boris Johnson’s sanctions on a select number of Russian billionaires and banks, we’d expect additional sanctions to follow in the coming weeks as the geopolitical situation continues to evolve,” McCall said.
“However, there is a wider issue at hand as London’s reputation is at stake with MPs rightly pointing out that it is a ‘laundromat’ of dirty money, and arguably the global money-laundering capital of the world. It has taken a geopolitical crisis for it to hit home why AML checks matter at the highest level.”
McCall said that, while the government has committed to increasing transparency to counter this onslaught of money laundering, most of this ‘dirty money’ comes through the purchase of London-based properties. New figures have revealed that £1.5 billion worth of property in the UK has been bought by Russians who are facing allegations of corruption.
“Those laundering money in the UK are hiding their crimes behind huge piles of paperwork, using techniques such as presenting fake bank statements to time-poor employees who are not necessarily specialised in fraud detection,” McCall claims. “Every day, property and conveyancing businesses are getting buried under huge volumes of paperwork, slowing down processes and making it harder than ever to keep track of the truth.”
He insists initiatives such as Open Banking may hold the key to unlocking effective AML checks ‘by providing essential transparency for all parties, including the government, to gain insights on currently hidden finances’.
“Centralised, automated data collection can feed into a rapid online check that shows proof and source of funds as well as account verification, providing property and conveyancing firms and at a higher level, the government, with a simple and easily evidenced route to compliance and AML,” McCall added.
“However, these processes need to be scalable and digital in order to address money laundering and fraud concerns at every level.”
He concluded: “The solution to cracking down on the huge amounts of money laundering in the UK is simple – reduce our relationship with paperwork and look instead to a form-free future. By eradicating any unnecessary form-filling, we can make property sector transactions not only swifter, but more transparent as well. Maybe with the headlines this week, people will begin to understand why effective AML matters.”