property fraud

Facing up to property fraud

Property fraud has been a growing threat in the digital age – but the buoyant housing market and a looming recession are creating a perfect storm for criminals looking to cash in.

In one well-documented case, a man returned home from a work trip only to find it had been sold and stripped out without his knowledge.

Scammers are quick to exploit periods of economic uncertainty, and what could be more lucrative than getting their hands on someone’s property? Living in a connected world means there are more opportunities for these criminals to exploit vulnerabilities in digital systems, and even use AI to generate imagery and create false identities online.

While cases like the one mentioned above are thankfully rare, they remind us that the threat of property theft is ever-present. Not only do conveyancing solicitors deal with high-value assets, they’re also increasingly operating entirely online – unlike their colleagues in family or criminal law, whose often-emotive cases require more face-to-face meetings.

Nobody is suggesting that conveyancers move away from their online-only model, since clients benefit from more choice and competitive pricing, and the convenience of being able to manage their case at a time to suit them. But without robust customer due diligence (CDD) checks, including Know Your Customer (KYC) and anti-money laundering (AML), solicitors run the risk of being fined by the SRA, and unwittingly assisting fraudsters.

This is why there’s a compelling case for biometric identity checks to become standard across the legal profession.

From a client’s perspective, checks of this kind are nothing out of the ordinary. From banking apps to airport security, they’re a fast and effective way to verify ID. Anxious about the risk of property fraud, clients may well see biometric checks as a differentiator when choosing a conveyancer because it adds another layer of protection.

For biometric tests to be successful, they need to be easy for clients to use as part of the onboarding process, not something that’s likely to cause frustration. However, these tools are developing all the time so it’s now possible for them to complete “liveness checks” (i.e. prove they are human and not an AI image) in seconds by scanning their face with their mobile.

Biometric tests help busy solicitors to improve accuracy and save time. Declining numbers of conveyancing solicitors has been a cause for concern for some time now – but the exodus reached “unprecedented” levels last year amid the disruption of Covid and demand driven by the SDLT holiday. Anything that can make compliance processes more efficient, and alleviate the workloads of their remaining colleagues, is surely a positive step.

Just as they can reassure clients, fully compliant biometric tests can assuage the fears of diligent solicitors too by reducing the chance of human error and stress levels.

They enable firms to develop clear and consistent processes that support compliance with all relevant regulations as they change. They can also protect firms against unscrupulous staff members colluding with fraudsters since biometrics ensure greater transparency across the firm – far more than a photocopy of someone’s driving licence or utility bill.

Indeed, the level upon which biometrics satisfy the risk element, cannot be understated. Having the ability to analyse finite details of each document within microseconds is something which goes far beyond what the human eye could ever conceivably complete. Being able to confirm driving licence numbers against fraud databases and quickly checking text for tampering, are just a few elements that can make a huge difference in security protection.

It would be easy to be nostalgic about the days when firms served generations of the same family, and solicitors were on first-name terms with them. But many clients today, particularly younger ones, certainly don’t want to return to the days when they had to provide wet signatures in-person, rather than completing the transaction online.

It’s not far-fetched to imagine the government making biometric tests compulsory for all property transactions. As speculated in this publication, a good step forward would be HM Land Registry storing an encrypted copy of a client’s ID so that solicitors can reverify it. This, along with biometrics, could set a new standard for how checks are performed as fraudsters’ tactics become more sophisticated.

Mike Connelly, director of conveyancing software provider, Legal Bricks, part of Access Legal

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