HMRC to name and shame estate agents as fines top £1.6m for AML breaches

More than 250 estate agencies have been fined a total of over £1.6m for breaching anti-money laundering requirements, HM Revenue and Customs (HMRC) has announced. The fines range from £1,500 to over £50,000.

Over the coming weeks HMRC will publish a follow up list outlining where estate agents have received financial penalties for breaches of the legislation. These will include an absence of firm-wide documentation, incomplete or incorrect Customer Due Diligence (CDD) within the required timeframe and a lack of recognition of specific risks such as the value of property, High Risk Jurisdictions, Politically Exposed Persons (PEP’s), Companies, Trusts and Sanctions.

Malcolm Driscoll, lead AML Consultant, FCS Compliance, said: “Registering with HMRC is one of the most basic requirements of the Money Laundering Regulations (MLR).  However, so many businesses fail to complete this simple obligation, either by ignorance or by believing that the regulations simply do not apply to them.

“While we accept our legal obligations to drive on the road – a driving licence, insurance, passing a test – for some there is a reluctance to accept AML obligations are needed to facilitate a property transaction where large sums of money are moved between parties.”

HMRC’s follow up list of further penalties will originate from its inspections, many of which will have been made on-site.

Driscoll added: “To be compliant a business needs an accurate AML Policy & Procedures Manual and AML Risk Assessment that reflects the company’s business activities, awareness of the legislation, adherence to it and the specific risks that the company faces.  Additionally, staff must be trained regularly and the obligations to the completion of CDD fully understood and undertaken.  These are the things that HMRC are looking at when they conduct their ‘random’ and ‘short notice’ inspections.

“All agents are at risk and it’s up to them to mitigate those risks or accept they could face an onerous HMRC fine.”

 

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7 Comments

  1. Targeting 3 week exchanges

    But the illicit money is coming from …….a bank – unsanctioned!!!!!???

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    1. GS168

      One only has to go onto Youtube, put ‘HSBC money laundering documentary’ into search and your eyes will be opened about corruption.

      There are countries where it is the responsibility of mortgage brokers and the banks to complete the AML when a mortgage is involve. Buyers usually have their mortgage approved before they put an offer on a property.

      If the transaction is a cash purchase then it becomes the estate agents and legal representatives problem to complete the AML process.

      Would life be made easier if we had the same

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  2. Hit Man

    Oh yes lets hit the easy targets the agents, I don’t understand why estate agents have to register and undergo AML checks when solicitors already do the same. It feels like a redundant process solely for generating revenue. It almost resembles a cartel, especially with external parties like Propertymark attempting to influence the estate agency industry to capture their share of agents’ fees.

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  3. cjhhhh51

    Totally agree with you. Perhaps a law against us taking large suitcases of cash for property purchases would be fine but if there are solicitors and lenders involved, how is this our problem? We’re the easy target as you say. Most these fines seem to be for breaches in procedure rather than actually assisting money laundering (Although we’ve not seen the full list yet). Another example of this government “fixing” problems that aren’t there and doing nothing about the many difficulties there actually are.

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  4. Info.Sec

    If agents took the risk-based approach so often advocated by Government / Regulators with regards to compliance, surely few firms would bother?

    Of the many thousands of agencies practicing, according to this article just 250 were prosecuted with a total of £1.6m levied in fines. An average fine of just £6,400 per infringement. Is that an existential threat to your agency, or just a couple of fees?

    So whilst the article rightly suggests, “All agents are at risk and it’s up to them to mitigate those risks…….” Given the potential impact to your agency of non-compliance and the costs of mitigation, would AML actually be high on any agents risk register? Not if one took a risk based approach.

    Risk management is an essential business tool, not least, it helps determine business priorities and resourcing decisions.

    Lastly a thought for HMRC, as a colleague at Interpol once commented, “regulation without enforcement is just good advice.”

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    1. GS168

      Well I partly agree ‘regulation without enforcement is just good advice’ and if you do a Youtube search ‘HSBC money laundering documentary’ the fines for banks is a drop in the ocean compared to their profits, it just a slap on the hand.

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  5. Hit Man

    Are letting agents more susceptible to risks like money laundering since they handle financial transactions, unlike estate agents? And do anti-money laundering (AML) regulations apply to property portals, private sellers, and landlords who essentially perform similar functions to agents?

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