Agent hit with massive anti-money laundering fine tells of shock

The ‘shocked’ agent hit with a £169,000 fine by the now-defunct OFT is appealing against the decision.

The fine, the largest ever to have been levied against an agent by the OFT, was for alleged breaches of money laundering rules – and was initially even higher.

The penalty, along with large fines on two other agents, was announced in a press release and on the OFT’s website on the organisation’s last working day.

David Jackson, of ARLA and NAEA firm Jackson Grundy in Northamptonshire, told Eye: “We were absolutely shocked and stunned by this heavily disproportionate fine – particularly as it came after what was no more than a two-hour inspection.

“In our naivete, we thought that the official was actually there to offer us help and advice, so we were completely open with her. We thought she was there to assist.”

Jackson revealed that the visit was back in May 2012 and involved the inspection of just six files.

The firm, with 12 branches plus a head office, generally has some 700–800 homes for sale at any time, and marks its 20th anniversary this year.

In the files, the official discovered that ID checks had not been made correctly – something that Jackson freely admits, but considers were little more than minor administrative breaches, for example, not checking a passport or asking to see a utility bill.

“After the visit, she wrote to us telling us what we needed to do to comply and giving us two weeks to put new procedures in place.

“This we did. But 20 months later, last December, we were notified that we were to be fined £200,000.

“We immediately appealed, which involved hiring a barrister, so this was not cheap, and the process was quite detailed.

“We made our arguments – including correcting them about residential lettings, which are not included in the Act. We then heard the fine was being reduced to £169,000 and we continued to appeal.

“The next thing we heard was on the last Thursday in March telling us that the final sum was to be £169,000. To our horror, the announcement was made the next day, and has caused us untold problems – not least because it went to the mortgage press and brokers.”

The fine should never have been announced, says Jackson, while the appeal process was – and is – ongoing.

“My MP has taken up our case, and our barrister is hopeful that HMRC, which has taken over the anti money laundering duty from the OFT, will look at it with a fresh pair of eyes.”

The Tory MP for Northampton South, Brian Binley, said: “I am absolutely stunned that the Office of Fair Trading, in its final throes, has hit out in this manner.

“To fine a well-known established company £169,000 seems to me to be unnecessarily vindictive, not least when you note that the company openly welcomed help and advice from the OFT as to how they could improve their processes to ensure they did not fall foul of money laundering rules.

“Indeed, it becomes even more vindictive when you note that the Office of Fair Trading itself had recognised that the company had reacted and changed its processes for the good.

“We should be supporting British businesses rather than trying to destroy them.”

The MP is writing to HMRC and raising the case with the Treasury.

The two other agency firms hit with large fines by the OFT on its last day of operation were London firm Hastings International, which was fined £47,966, and Jeffrey Ross, of Cardiff, hit with a £29,000 fine.

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2 Comments

  1. Eric Walker

    Accepting what David Jackson says, this case seems extraordinary. Had it been the case that they had been complicit in a crime, I could understand it, but I would have thought a slap on the wrist would have been sufficient. Especially considering the contracting parties in the sale would also have undergone AML checks by their respective lawyers and banks.

    When you think of agents who have stolen thousands of pounds of tenants money, and lawyers which have failed to pay of SDLT it seems an incredibly disproportionate punishment.

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  2. Paul H

    Interesting to know if the fine amount would have been the same for 1, 6 or 1000 properties that they had not complied with.

    It appears that only 6 property files were inspected, but was the fine based on the fact that the inspector was told that all properties dealt with by the company had not had the relevant checks.

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