wmlro.com: serial due diligence failures lead to successful fraud

The case reveals a series of failures of the effectiveness of due diligence through the entire property services chain:

- fraudsters were able to obtain documents that enabled them to satisfy estate agents and lawyers that they were the true owner of the property

- they were able to open and operate a bank account (in China) to which funds were credited after the transaction was completed

The fraud was made easier because, as an offshore owner, Mildenhall would be expected to conduct his business on a non-face-to-face basis. The fraudsters impersonated him.

Australia's latest anti money laundering laws are designed to make all parts of this value chain subject to requirements to undertake due diligence measures including making sure that the client is who he says he is.

But the narrow focus of anti-money laundering laws is often fixed on the purchaser: he who is bringing the money to the table. The opposite side of the equation, the seller, is often largely overlooked - especially if due diligence has been previously done.