Estate agents continue to be at risk of fines from HMRC for non-compliance with the Anti-Money Laundering regulations – with widespread confusion in the industry as to requirements.
Latest research from agency supplier Landmark shows worrying gaps in understanding when it comes to AML.
Just 12% of those surveyed scored 100% in a multi-choice survey relating to the existing regulations and changes introduced as part of the 4th Money Laundering Directive (4MLD) last June.
4MLD introduced the requirement to undertake checks on purchasers in addition to vendors, but only just over 50% of respondents correctly identified that checks on purchasers are required when the buyer’s offer is accepted by the seller.
One of the areas of most concern is understanding the importance of demonstrating a risk-based approach.
Estate agents are required to have a process in place to identify the level of risk posed by the individual to the business from an AML perspective. Each client should be assessed individually and an appropriate level of check applied.
The research shows that while management and business owners demonstrate a good understanding of this, it is not being disseminated to front-line staff.
Ben Robinson, director of agency services at Landmark, said: “Irrelevant to their own knowledge and understanding of the regulations, business owners and management who are not training their staff will be identified and targeted.
“When HMRC first contact an agent, they will be asking relatively straightforward questions, such as who is the Money Laundering Reporting Officer (MLRO), to whoever answers the phone.
“If that person doesn’t know the answer it’s not too much of a stretch to assume you may have them knocking on the door soon after.”
The survey also showed:
- 13% of respondents believe a PEP to be a “Property Exempt Professional”
- 10% of agents believe Trading Standards police the AML, while a concerning 7% believe the Office of Fair Trading does – although the OFT has been defunct since March 31, 2014
Over 200 agents have so far responded to the survey, which is still open.
You can test your knowledge at https://www.surveymonkey.co.uk/r/Y8HGDKH
Meanwhile, firms offering anti-money laundering (AML) checks are increasingly expanding into the agency sector amid reports of firms facing rising fines.
SmartSearch, which initially focused on the legal and accountancy sectors, has told EYE it has signed up more than 300 agents to its services.
It partners with data suppliers such as Experian, Equifax, Dow Jones and Companies House to verify identities.
While it is possible for a firm to check each of these sources individually, SmartSearch said this can take many hours.
It does not disclose how much the service costs as it depends on how many checks and the types of bundles a company purchases, rather than them paying a monthly fee.
Martin Cheek, chief executive of SmartSearch, said: “Estate agencies are particularly vulnerable as many of the checks they are now subject to are completely new to them, especially as they now need to conduct money laundering checks on both vendor and buyer.”
It comes after identification verification company Credas was chosen by The Guild of Property Professionals as its anti-money laundering verification partner. Guild members will get access to the services that include facial recognition technology.
Last month, EYE revealed that HMRC could start naming and shaming non-compliant businesses.
Meanwhile, Mark Hayward, chief executive of NAEA Propertymark, said there had been a “ramping up of compliance activity” but that the level of fines was not being publicly revealed.