Overview: When does a quick sale become a crime?

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The Independent Online

If you have just sold a house and not been asked for a passport and other identification, then your agent was breaking the law.

If you have just sold a house and not been asked for a passport and other identification, then your agent was breaking the law. Money laundering might be thought of as a shifty affair involving suitcases filled with cash and, as far as property is concerned, flash villas on the Costa del crime rather than three-bedroom semis in the Home Counties. But, under new EU legislation, estate agents now have to be alert to financial skulduggery on every transaction.

Although it has been a few months since they were included among those businesses required to report anything suspicious, only now is the dust beginning to settle. Generally, those estate agents dealing with high-value properties and an international clientele stepped into action fairly promptly, although even they were not of one mind as to how the law should be interpreted.

On the high street it has been a rather different story, with some agents either ignorant of the legislation or ignoring it altogether. Unfortunately for those scrupulously following the letter of the law, requiring them to check their client's identification has not always been greeted favourably. Indeed, vendors' reaction to being asked for personal documents has ranged from the mystified to the outraged. Needless to say, those most offended have taken their properties to those agents not complying with the regulations.

Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), has been concerned at the way those not playing ball are putting his members at a disadvantage. He points out, however, that as an EU measure it is better suited to the European property market, where agents often act as notaries, rather than the UK process involving a raft of professionals each collecting the same information. (Something he regards as excessive and unnecessary.)

This is pretty much how it is regarded on the ground by those who have to think like a detective with every new transaction. Some even worry that the onus on them to report anything suspicious could be construed as working against their client's interests, although the authorities have only seven days in which to act.

The complicated structure of some sales, involving trusts, limited companies, local councils and even those who are no longer alive can make it a bureaucratic nightmare. In many cases, an agent never sees a client who might be an investor thousands of miles of way. And on top of that, the ID must be kept for five years.

So what are they on the look out for? John Kennedy, a senior negotiator with Knight Frank, says an innocent decision would take on more sinister overtones now. Selling cheaply might be evidence of laundering. "But not everyone sees property as their major investment. We sold a flat for a client who wanted to move to France quickly after her husband had died, for about £100,000 less that she might have got for it. I would have to submit a report on that today."

Has he ever had suspicions about clients in the past? "Just once in 25 years," he replies.

While on the subject of estate agents, the Royal Institution of Chartered Surveyors has published three guides on buying, selling and understanding property surveys. They address such pitfalls as buyers forgetting about costs such as stamp duty, removal and solicitors fees, and the danger of sellers falling for plausible agents who are not bound by any code of practice.

This ties in with the most recent report from the Ombudsman for Estate Agents, whose three largest categories of complaints from sellers involved disputes about the commission fee, dissatisfaction with an agent's evaluation of a buyer's ability to purchase the property, and doubts about the initial valuation of the property. Perhaps the lesson from this is that guidelines or no guidelines, the best advice is buyer - or seller - beware.