Mortgage fraud: spotting the warning signs

As part of the Property Section’s fraud and cybersecurity seminars, I have been asking lenders to give me real-life examples of fraud cases where the conveyancer has failed to carry out adequate due diligence. The attached PDF features an example of a ‘property hijack’. The commentary has been provided by the lender.

Do you agree with what they consider were the warning signs which the conveyancer should have spotted? It is always easy to identify mistakes after the event, but they may not be quite so obvious at the time. There are, however, some clear guidelines which we all need to follow:

1. Never accept at face value copy documents certified by a third party.

2. Always:

• check that the certifier is part of a regulated body
• obtain confirmation from them that they did indeed certify the copy, that they saw the original and met the person concerned.

3. Remember that if you don’t meet the client, you must carry out enhanced due diligence.

4. Remember that PDFs can be altered – seek originals whenever possible. If they are not available, treat the PDF with care.

5. Try to trace the source of funds back to its original starting point – a large sum of money being deposited into an account is a warning sign. Where did it come from? Can you obtain copies of bank statements for the account from which the money came? Who does the account belong to? Remember your obligations to a lender client under the CML Handbook, as well as your AML responsibilities.

6. If there is anything unusual or odd about a transaction, don’t ignore it. Seek a second opinion. On closer examination, is there more than one odd aspect to the transaction?

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