A new Home Office paper about money laundering and terrorism has said estate agents are low risk.
It has also pointed to the changing shape of the estate agency industry, saying there are now more large firms.
The document says that consolidation in the industry has led to more large firms being registered for anti-money laundering.
It says that the number of agents registered rose from around 8,000 in 2014 to some 9,500 last year.
Registration is compulsory for businesses, rather than branches.
The paper says that most of the estate agency firms registered are small businesses, “though restructuring within the sector has led to the number of large firms increasing from 17 in 2015 to 77 in 2016”.
The Home Office defines “large firms” as those with over 50 premises, and with annual property sales of £50m or higher.
Its new paper says that estate agents pose a low risk to money laundering and terrorist financing.
However, it also suggests that the number of agents signed up – as the law requires – seems low.
It blames lack of awareness among agents.
The paper is also critical of agents, saying they are slack at conducting due diligence, often relying on others to do so.
It says that in 2015, a “large number” of estate agents were not thought to have registered for AML supervision, due to lack of awareness.
However, in 2014 HMRC became the supervisor for estate agents “and has taken action to significantly increase registration rates”.
The paper says HMRC works closely with trade bodies and firms to raise awareness.
The paper emphasises that while property represents a medium risk to money laundering, agents themselves represent only a low risk.
It says: “Property continues to be an attractive vehicle for criminal investment, in particular for high-end money laundering.
“While effective and comprehensive due diligence on all parties by estate agents can help mitigate the money laundering risks around property . . . much of the risk lies with those closer to the client and their funds, such as legal professionals.
“Neither estate agency services nor property are judged to be attractive for terrorist financing, and we have seen no evidence of these areas being abused for terrorist financing, so the terrorist financing risk associated with the sector is low.”
The paper says that the type of property particularly at risk is “super-prime” in London and Edinburgh.
The report is a lengthy one, but the section on estate agents starts at page 54.
National risk assessment of money laundering and terrorist financing 2017
So report says ” much of the risk lies with those closer to the client and their funds, such as legal professionals”
but the govt says;
but lets introduce more red tape to small businesses and cost for something thats not much of a risk at all and doesnt really apply to them.
Amazing – Im constantly amazed at the added layers that govt and quangos keep on piling on when there is no real need. Have none of them actually run a small business?
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No, Seenitall, they haven’t. Most are career politicians who don’t have a clue how the private sector works.
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Don’t be mislead. If you fail to undertake appropriate Client Due Diligence and if you fail to consider wealth and source of funds you are committing an offence and could be prosecuted. You must have a system which complies with the Regulations and you must record what you do. Your staff must be trained and training must be recorded.
If the transaction appears to have stuck in the mud then you can assume that a SAR has been made. What you cannot do is tell your client as that could be tipping off. The Solicitor will not tell you that a SAR has been submitted for the same reason.
Waiting for “consent” from the National Crime Agency takes time.
You should:
1 get photo id from the client(s) in person. Check it and compare it to the client)s) and record that has been done. You must keep a copy. The simplest way is to photocopy a passport or driving licence and stamp it with a declaration that this is a true copy and a true likeness signed and dated by the member of staff
2 a recent utility bill. It should be date stamped and signed and dated by a member of staff
3 at least 6 months bank statements from the relevant account(s) which should be read (not just copied)
4 you must ask if the client(s) is/are politically exposed persons and if they are undertake Enhanced Due Diligence
You cannot rely on what you assume others wil do. You have responsibilities and you must comply with them.
And then you ask yourself-does this all add up. Have I any suspicions about this person/these people and/or about this transaction. “Why has/have the client(s) come to us?” is always a good starting point along with a willingness to say “no”.
Solicitors and the banks will make more detailed enquiries about the source of funds and those people who may be contributing a deposit or “gift”. Banks are making a large number of SARs perhaps more out of a willingness to show that they are taking AML seriously than having a legitimate suspicion. The NCA believe that Solicitors are under-reporting.
I think you can expect more delay.
We have had several estate agents “disgusted and annoyed” when we explain the “delay” by saying that we are complying with regulatory requirements probably because they don’t know what we mean. Hopefully that reaction will now cease.
We have also considered as suspicious rinky-**** deals suggested by estate agents to our client and made appropriate reports.
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