Property money laundering: How "clean" companies hide dirty cash
Published
When a client approaches you to buy a high-value property, and they have the bank statements and corporate structure to back it up, it’s easy to feel comfortable.
But in our recent webinar, Compliance Leaders vs Fraudster, we learned that a paper trail isn't always proof of legitimacy.
We were joined by Alex Wood, a former career criminal turned fraud prevention expert. After spending 25 years committing serious financial crime, he now works with the police to expose the tactics he once used.
One of the most eye-opening methods he revealed was the "Nominee Director" structure: a trick designed specifically to beat standard checks and purchase multi-million pound properties right under the nose of major law firms.
Avoiding the "Unexplained Wealth Order"
For a criminal with millions in dirty cash, the biggest fear is an Unexplained Wealth Order. If you buy a £5 million house in Mayfair but have no visible legitimate income, their instructed firm and even the police will start asking questions.
To get around this, fraudsters need a clean front.
They will often set up a UK limited company and register it with a specific SIC code (Standard Industrial Classification), for example, as a property developer or a car dealership.
But a company needs a face. And if the face is a known criminal, the scheme fails. So, they buy a clean one.
The "Nominee Director" trick
The fraudster pays a genuine, high-net-worth businessperson to act as a nominee director or shareholder.
By paying a fee (often around 5%), the fraudster gets a legitimate businessman to front the company. They then create a fabricated paper trail of emails to prove the business relationship.
He's a shareholder. So if the police come and look... you say, 'No, it's owned by this company... backed by an ultra-high net worth guy'."
Alex Wood
On paper, everything looks perfect. The funds appear to come from a legitimate business venture backed by a wealthy investor.
Why major law firms miss it
This isn't a theoretical risk. In the webinar, we heard how a major UK law firm handled the conveyancing for these deals and saw nothing wrong.
The firm did their checks, verified the identity, and looked at the documents. But they missed the reality of the situation because they were looking at the what, not the why.
This highlights the single biggest challenge in Source of Funds compliance. We are often asked: "How far back do I need to go?"
There is no blanket time period set by regulators. The SRA doesn't say "three months" or "six years." Instead, the rule is much simpler: you go back until it makes sense.
In the scenario Alex described, the paperwork was perfect but does it make sense? Does it make sense for a billionaire casino owner to financially back an unknown British individual with no track record? The red flags weren't on the bank statement; they were in the relationship.
When you rely on static PDFs, you spend your time verifying if the document is real. At Thirdfort, we automate that data collection so you can spend your time answering the important question of: Does this story hold up?
Dig deeper than the PDF
If a major firm can be fooled by a paper trail, anyone can. Relying on PDF bank statements or simple corporate documents leaves you vulnerable to well-structured evasion.
At Thirdfort, we believe in looking at the source, not just the surface. Our Source of Funds verification uses Open Banking to retrieve digital statements directly from the bank and can also read client bank statements shared as PDFs or images to produce the same insights. By analysing the true journey of the funds over time, rather than just a snapshot provided by the client, you can spot the inconsistencies that a well-crafted paper trail tries to hide.
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