Conveyancing solicitors have been put on high alert after a recent court judgment orders a firm, that fell victim to identity fraud, to pay more than £1m in compensation [Source].
London based firm, Mishcon de Reya, was found to be liable for breach of trust after its client was cheated into purchasing a London property from a rogue tenant posing as the owner.
The claim was based on the alleged failure on the part of the law firm to do the proper due diligence required on the seller.
The ruling of this case should ring alarm bells to everyone involved in property dealings. No one should fall victim to identity fraud, especially for an increasingly common property scam in which rogue tenants pose as owners to sell a property they don’t actually own.
Property scams like this can result in victims being left with a mortgage for a property they have no right to, damaged credit ratings, crippling solicitor’s fees and potentially bankruptcy.
Here at Contego we have witnessed the rise of property fraud. Just last year courts ruled a similar case involving a rogue seller who committed a £470,000 fraud, that conveyancers on both sides of the transaction were liable. The Judge declared that the Windsor firm A’Court & Co, made no sincere attempt to comply with anti-money laundering regulations to prevent the fraud and critically obtained no documentation linking the seller to the property. [Source]
Another high-profile case of property fraud to hit the media was that of Max Hastings, author and former Daily Telegraph columnist. Hastings received huge media attention when his wife became a victim of property fraud in December 2015. Writing in the Daily Mail Hastings explained, how his wife almost lost her investment property, when identity thieves scammed £1.35m from an unsuspecting purchaser [Source].
What all these cases demonstrate is that there is an increasing need to not only to follow the required regulatory checks but to go beyond this, and perform extensive due diligence on all parties involved in every transaction.
At Contego, we are on a mission to combat fraud within the property sector. We provide our clients with the best practice fraud reduction and due diligence solution on the market.
We do this by providing real-time, automated checks on People, Companies and Identity Documents, combined with one of the largest databases of screening information.
Some of the UK’s largest property firms rely on us to mitigate fraud risk when onboarding their customers. We help them ensure they not only comply with current Money Laundering and Right to Rent regulations, but we importantly help them go beyond this and help them consider increasing and new emerging threats.
As a greater focus on regulation enforcement continues, along with the increase in size of fines imposed, the risk of financial and reputational damage for non-compliance can be considerable and hard to bounce back from. Introducing best practice risk mitigation and due diligence processes can help you comply with regulation, protect your brand reputation and give your customers peace of mind.
If you want to ensure you are doing the maximum possible today to reduce your risk, keep the regulators at bay and be ready to tackle increasing fraud threats, then get in touch today by calling +44 (0) 1235 375 000 or book an online demo.
