Anti-money laundering fines imposed by HMRC are not broken down by sector, making it impossible to verify independent claims that almost one in five estate agents have been fined over anti-money laundering breaches.
HMRC supervises seven different industry sectors, including estate agents.
However, it will only make available overall figures, and it is not known how many agents have been fined since HMRC took over anti-money laundering regulation from the Office of Fair Trading three years ago. Nor do we know what the average fine is, or what the biggest fine has been. This is despite HMRC publicising its crackdown on the sector.
In January, for example, HMRC said it was considering naming and shaming agents breaching anti-money laundering requirements and was said to be ramping up its supervision activity, making spot checks and paying unannounced visits.
Just before Easter, HMRC would not extend its deadline for agents having difficulty registering for anti-money laundering supervision because of problems they were having with both HMRC’s own website and the helpline.
This week, an HMRC spokesperson told us: “HMRC takes failure to comply with the Money Laundering Regulations extremely seriously, and we carry out regular checks to ensure customers are correctly following the rules.
“For the three full years since 2014-15, when we became the supervisor of estate agency businesses, we have issued 2,725 penalties with a total value of £2,498,111 for all sectors – including estate agency businesses – for failing to comply with their obligations.”
While cynics may suspect that this means that HMRC does not keep records by sector, the spokesperson added: “We haven’t previously given out detailed breakdowns of penalties for each sector we supervise, as this could aid criminals by highlighting how we deploy our resources and may be used to identify businesses.”
The sectors supervised by HMRC for anti-money laundering are: money service businesses; accountants; trust or company service providers; high value dealers –for example in planes and speedboats; estate agents; bill payment service providers; and digital payment service providers. However, we do not even know which sector provides the greatest risk.
EYE had asked HMRC for information as to how many estate agents had been fined since HMRC became the anti-money laundering regulator; what the average fine has been; and what has been the highest fine imposed on an estate agent.
However, none of this information has ever been available from HMRC, and we found this continues to be the case.
Our question was prompted by a press release from an ID verification company, Credas, which claimed that nearly a fifth of estate agents (19%) have been fined for anti-money laundering breaches.
Credas said the average fine was £11,842.
Of the 19% of agents who had been fined, a third were fined between £15,000 and £25,000.
We contacted HMRC to see how its own figures compared – but were unable to get any information.
Credas’s figures were obtained from agents themselves, recruited – and paid – to take part in a poll last December.
Credas did not ask the agents when they were fined, so some of the fines could have been quite historic, and levied by the OFT under the Money Laundering Regulations 2007.
However, if 19 out of 100 agents were fined an average of £11,842 each, the total would be £250,000 – although over an unspecified time period.
Scaling up the cost to the whole industry is difficult because of the guesswork involved. Last year, according to compliance firm Lysis Financial, there were estimates that over 800 estate agents were fined. If so, then estate agents represented easily the lion’s share of the 880 businesses issued with penalties.
In 2012 a public, searchable register of estate agents was launched by the OFT, and this had 6,742 agency businesses on it. HMRC tells us that as at January this year, 10,236 agents were registered.
If one were to assume that over an unspecified period of time, 19% of 8,000 estate agency were fined, that would be 1,520 businesses being fined a total of £18m.
If we take the 10,236 agents currently registered with HMRC and assume that 19% of them are fined an average of £11,842 at some point in time, then a total of 1,944 agents would be fined a total of £23,020,848. It sounds unlikely, given that it is so much greater than the overall number of fines HMRC has so far dished out.
But will we ever know?