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Why property professionals need even more help with money laundering according to First AML
An overview by Simon Luke, UK Country Manager at First AML, ‘As a relatively low-risk investment, and an opportunity to increase funds through reselling and renting, the property sector is uncoincidentally an attractive choice for criminals to clean their “dirty money”. Over $2.3 billion was laundered between 2015 and 2021 through US property, as reported by Global Financial Integrity (GFI). Likewise, it was detected that high corruption-risk individuals purchased 160 properties worth over £4 billion in the UK during 2017 alone.
Money laundering through property is one of the most established paths to move and conceal illicit funds. Donald Toon, the director of economic crime at the National Crime Agency, expressed that “the London property market has been skewed by laundered money. Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK.” The consequence? An artificially distorted property market, while human trafficking, terrorism, and other forms of organised crime continue.
When it comes down to it, the obligation of identifying and minimising the risk of money laundering ultimately lies with frontline compliance teams. However, solely recognising the high risk nature of property and being aware of the tools on hand is not enough. More help is needed to minimise the threat of money laundering and shift the needle on the wider perception that property is a safe haven for dirty money.
It’s no mere coincidence that property serves as a prime target for money launderers. Criminals are acutely aware of the industry’s susceptibilities and exploit them to their advantage. Busy compliance professionals may unintentionally overlook warning signs or be overwhelmed by their workload when in a position to pinpoint red flags.
Using third parties to hide an identity, limited face-to-face contact for considerable transactions and transactions from high risk jurisdictions are just some examples of how it occurs. If compliance professionals spot any of these indicators, it’s crucial to sound the alarm, even though they might grapple with uncertainty about these warning signs or find themselves overwhelmed by their workload. (Simon Luke UK Country Manager).
Estate agents have collected the highest proportion of AML fines from HMRC since AML supervision was established, with 45.4% of all fines charged to them. This is due to regulation being hard to digest and occasionally unclear, creating a gap in understanding. This emphasises the importance of hiring well-informed compliance professionals.
AML in property can be difficult and complex, but a tiered approach can be applied to make it successful. Better understanding of HMRC guidance is crucial for AML processes to thrive in property by filling the gap in knowledge of those who should be leading the charge, therefore improved and robust training is crucial.
The same can be said for the value in building a strong culture of compliance in the workplace, with core pillars key to its success. Most importantly, the ethos is set from the top; all board members and senior management should emphasise the importance of AML and empower compliance officers through their positive actions.
These should include focusing on the threats revealed in ethics and compliance risk assessments and using the findings to determine the actions necessary to avoid, mitigate, or remediate those risks. Additionally, a thorough testing and monitoring programme, which is evaluated regularly, should be in place to ensure that the control environment is effective.
With technological advancements facilitating lengthy manual tasks such as screening suspicious names, monitoring monetary transfers and automating sanctions checks, compliance professionals can allocate more time prioritising the analysis of flagged activity and report when required.
The bottom line
The exploitation of the property industry by criminal enterprises is well documented. It is critical that compliance professionals in property work to minimise this risk and make the most of support available – such as advancing tech, comprehensive training and a culture of ethics and compliance – to bolster their hard work. Only then can the sector be considered, as the old saying goes, safe as houses.
How do RICS Surveyors Identify Mould and Damp?
Property Inspect, give some thought leadership regarding the ever present mould and damp problems faced by homeowners and tenants. Reports of excessive levels of mould and damp have dominated the news cycle over the last two years, put firmly under the microscope after the tragic case of Awaab Ishak came to light. In the past two years alone, complaints about mould in social housing have doubled.
‘If left untreated, mould and damp can cause serious health problems and damage to the structure of the building. It could also be true that damage to the structure of the building is one of many potential causes of mould and damp in residential properties.
While the issue of mould and damp remains somewhat under-researched – which has reportedly led to many homeowners and tenants making costly mistakes – surveyors are well versed in the signs and symptoms of mould and damp and can easily identify them. In this article, we’ll look at how to identify mould and damp, what causes it in the first place, and the role surveyors have in dealing with it.
Identifying the signs of mould and damp
Mould and damp are common problems in many homes, and they can be caused by a variety of factors such as poor ventilation, leaks or high humidity levels. These problems can not only damage a building but can also have negative effects on a person’s health. For that reason, it is crucial to know how to identify the signs of mould and damp so immediate action can be taken, hopefully, to prevent damage to the home and, more importantly, the occupant’s health.
The first and most obvious sign of mould is the musty odour. If a persistent musty odour lingers in the property, it is likely that there is mould growing somewhere. Discoloured spots on walls or ceilings are a common sign of mould, and these spots can be black, green or brown.
Damp, on the other hand, can be identified by peeling wallpaper or blistering paint. This is because the moisture from the dampness causes the adhesive to weaken underneath, resulting in peeling or blistering. This is not only the case inside the home, but outside, too. Wet patches on internal walls are also a clear sign of damp, sometimes causing the paint to become slightly powdery to the touch.
The presence of mould in a building can have a serious adverse effect on people’s health, that much is known. This is especially true for those with underlying respiratory issues. Mould spores trigger asthma attacks and cause allergic reactions, while dampness can lead to the growth of bacteria and viruses that can cause respiratory infections.
What are the causes of mould and damp?
Mould and damp can be caused by a number of factors, such as condensation and even the use of inappropriate building materials. Faulty drainage can also cause dampness, while leaks from services, such as plumbing and mains water pipes, can also be a factor to consider.
Penetrating damp can also be a cause, and it sometimes occurs due to defects in a building’s external envelope or cracks in masonry. Even modern impermeable building materials on breathable traditional building fabrics can be a cause, trapping moisture and therefore resulting in dampness. To that end, specialist surveying equipment may be needed to find the source of the issue. There are a variety of other “every day” cause to be aware of, too, including: Poor ventilation, Excess moisture and Rising damp
Poor ventilation is one of the most common causes of mould and damp. When there is not enough air circulating in a room, moisture can build up, leading to the growth of mould. This can be caused by a lack of windows or blocked air vents. To prevent this from happening, it is important to ensure that there is adequate ventilation in all rooms. This can be achieved by opening windows, installing air vents, or using a dehumidifier.
Excess moisture is another common cause of mould and damp. This can be caused by things like leaks, condensation or flooding. Leaks can occur anywhere in the home – in pipes, roofs or windows – and can lead to the build-up of moisture inside walls and ceilings. Condensation occurs when warm air comes into contact with cold surfaces, such as windows or walls. This can be a particular issue in rooms like bathrooms and kitchens, as is well-known by anyone living in the United Kingdom.
Rising damp is a common problem in older buildings that do not have a damp-proof course, or where it has failed. This occurs when water from the ground is absorbed into the walls, leading to the growth of mould and damp. It can be particularly problematic in basements and ground floor rooms, and is not an uncommon site in traditional-built UK properties.
Preventing rising damp can be achieved by installing a damp-proof course. It’s also a good idea to check that the ground outside the building slopes away from the walls rather than towards them, otherwise water might pool up against the property’.
How surveyors identify and deal with mould and damp
Surveyors are at the epicentre of home inspections, so are therefore well placed to identify mould and damp, root out the causes and recommend remedial work.
When conducting a home survey, qualified surveyors will use their expertise and specialist equipment to identify the source and extent of any moisture-related problems found during the inspection process. This will involve a visual inspection of the interior and exterior of the building. Surveyors will also assess the condition of the building fabric and any potential leaks or water damage. They will also measure humidity levels to determine the extent of the problem.
In order to do this, a surveyor will use specialist equipment, such as a moisture meter or thermal imaging, so they’re able to identify hidden moisture that is concealed and not immediately apparent to the untrained eye. So if you spot the signs of mould and damp when purchasing a property, be sure to find a RICS surveyor.
Once the cause and extent of the damp and mould have been identified, the surveyor can then provide expert advice on appropriate remedial works to rectify the problem and prevent it from happening again in the future. When mould and damp is present, it can result in claims under the Homes (Fitness for Human Habitation) Act 2018 and the Housing Act 2004. These can be costly, so understanding the cause of the dampness is crucial for both the landlord and the tenant.
Under law, if it transpires that the tenant is responsible for causing mould growth, then the landlord is not liable for any repairs. In cases like this, it’s therefore important to determine whether the mould and damp growth is due to the use and occupation of the dwelling. To that end, surveyors are able to determine whether it’s a dry, moist, or wet occupancy.
Many surveyors will ensure that the environmental conditions on the day of the inspection are noted and evidenced. They’ll use a variety of instruments to determine this, and in some cases there may be a need for long-term monitoring.
If the surveyor has found that there are no construction or design faults causing dampness and mould, then it could be the case that the building occupants and their activities are the cause of the problem. This can be as simple as failing to ventilate a bathroom after taking a shower or by keeping trickle vents permanently closed.
In conclusion, surveyors play a crucial role in understanding the cause of dampness and mould, and they’re able to determine whether it is indicative of the way people live or the building’s design or fabric. Given their expertise, qualified surveyors are well placed to provide impartial advice on suitable remedial works, so if you spot the signs of mould and damp, be sure to find a RICS surveyor.
(First published by Property Inspect earlier in 2023, for furthe information about what Property Inspect can do for you, please click on this link book a demo.)
Andrew Stanton is the founder and CEO of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.