HMRC has revealed that it has specifically warned estate agents in London about the “heightened risk” of deals where the source of funds is connected to Russia or Ukraine.

HMRC was answering questions from Eye in the aftermath of last week’s C4 programme, From Russia With Cash, which showed a number of London agents appearing to ignore money laundering requirements when dealing with a dodgy Russian buyer, ‘Boris’ – who in reality was an undercover reporter.

After the programme aired, we asked anti-money laundering expert Mike Day to write advice for agents and in his piece  for us he said: “Recent HMRC spot checks have caught out agents in London where they have taken sub-agency instructions from another agent and have not therefore got ID checks on the sellers. The lead agent may have done the appropriate checks but the sub-agent is left exposed.”

Across central and prime London, it is common for agents to “sub” out properties to other agents and to split commission, going through the well-used LonRes platform.

HMRC told Eye: “We have alerted estate agency businesses in a range of London postcodes, warning specifically of a heightened risk to be considered around transactions where the source of funds is connected to Russia or Ukraine.

“In addition, we regularly send out further refresher material, and have conducted webinars to remind businesses of their legal obligations, making clear their responsibility to report suspicious activity to the National Crime Agency.

“We have also been working with businesses and representative bodies to address their questions about due diligence required when acting as a sub-agent.”

HMRC’s webinars are, of course, not just for London agents, and the organisation plans to run further webinars for the sector later this year.

HMRC took over responsibility for agents’ anti-money laundering from the OFT a year last April.

We asked HMRC about the industry’s general compliance with anti-money laundering law, including how much of the industry is registered for AML purposes – as is required.

An HMRC spokesperson told Eye: “Since HMRC started supervising estate agency businesses last year, we have proactively tested and challenged businesses’ compliance with the Money Laundering Regulations as well as educating them on the risks they face.

“HMRC actively seeks to identify and contact unregistered businesses in all sectors it supervises, raising awareness of their obligations.

“Since we took on supervision of the estate agency sector, we have increased the registered estate agency business population by a further 10% and we continue to work closely with other supervisors to address gaps.

“We will continue to test and challenge compliance with the regulations and where we identify failings we will take action using the full range of sanctions available to us, including civil and criminal penalties.”

Last week’s C4 film featured NAEA and RICS agents.

They were Winkworth which specifically requires all its franchisees to belong to the NAEA, Marsh & Parsons also a member, Domus Nova, Chard and Bective Leslie Marsh.

The NAEA has announced an inquiry and said it is prepared to make expulsions if necessary.

The RICS told Eye: “We can confirm that one of the companies featured in the documentary is an RICS member, and RICS, with its public interest charter, will always investigate where the conduct of a member and/or members appears to be called into question.

“However, I am not able to confirm details of any live investigations which may or may not currently be underway.”

Luay Al-Khatib, director of regulation, said the RICS had been “greatly concerned” by From Russia With Cash, saying the programme revealed a “shocking failure in ethical behaviour” that was a sad indictment of standards in part of the industry.

In view of HMRC’s specific concerns over ‘subbing’ arrangements in London, Eye has made a number of attempts to invite LonRes to comment and will of course carry what the organisation has to say in any response.

It is not yet known whether any heads have rolled from the five agents as a result of the programme.