Property department launches new 'fraud-busting' procedure

Residential property lawyers at Harrowells Solicitors are turning detective to flush out ‘bogus lawyers’ from criminal gangs who divert funds away from house purchases at the last minute.

The residential property team at Harrowells, York, has launched new ‘fraud-busting’ procedures to tackle the new crime wave by highly-sophisticated gangs, which has hit London and several other major cities.

Several cases involving millions of pounds have come to light where criminals have used techniques including hacking into the email accounts of solicitors acting for home sellers and sending bogus emails saying which bank account payment must be sent to on completion.

Only when the transaction on the day of completion has failed have the homebuyers and solicitors found that the emails and bank details were false and that their cash was diverted leaving them substantially worse off and potentially homeless if their own property has been sold.

Now the 24-strong residential conveyancing team at Harrowells, which acts in hundreds of house sales each year throughout the UK and overseas, has launched thorough due diligence in an attempt to flush out the criminals at different stages of the transaction.

Harrowells residential conveyancing operations manager, Janet Rhodes-Blangsted, a former lawyer with top international firm, Herbert Smith, London, says: “Although, as far as we are aware, no cases of this attempted fraud have yet been reported in North Yorkshire, we are aware of an instance where West Yorkshire Police became involved.”

Under the new procedures Harrowells is supporting house buyers by obtaining details of the bank account of the seller’s solicitors at the start of the transaction.

Janet Rhodes-Blangsted adds: “By investigating the other law firm’s bank accounts at the start we can look for inconsistencies such as if the account shows low activity for a firm with a large residential property department.

“We also study the track record of any previous use associated with that account in detail and, if the results show the account is previously unknown, or with irregular usage, then this could be suspicious.”

Janet Rhodes-Blangsted says that if questions are raised about an account, further checks of more than 10 databases can be made to look at numerous aspects of its activity including trading names, location and professional accreditations. 

Checks are also made to ensure that there are no conditions, such as not being able to handle client monies, against solicitors listed as practising at the office searched.

She adds: “We repeat this process just before the day of completion. As criminals are increasingly turning towards cyber-crime we want to ensure our clients monies are secure and limit our chances of any fraudulent transaction taking place as high street banks and solicitors have been subjected to these types of cyber-attacks.

“These criminals are very clever and we are applying these defensive measures so we are as well prepared as possible as client care is paramount to all we do. Clearly all those in the housing sector need to be on guard.”