Is your firm falling foul of money laundering regulations?

Given that the purchase of property has the potential to be used by criminals due to the large funds which can be transferred in a single transaction, it is imperative that agents understand the regulations they are required to abide by and carry out the relevant checks.

The government estimates that organised crime in the UK can generate up to £24bn per year, and that is why agents are required to make carry out adequate customer due diligence measures when carrying out estate agency work.

That means establishing and maintaining suitable policies and procedures on adequate record-keeping, internal controls or risk assessments, whilst ensuring that relevant employees are trained in how to recognise and deal with transactions and other activities potentially related to money laundering and terrorist financing.

Internally, a person must be nominated to act as a Money Laundering Reporting Officer (MLRO), and a senior member of the management team must also be appointed to take responsibility for compliance with the 2017 Regulation.

Checks should be made on the sellers, as well as the buyers, while letting agents should also report any suspicious activity, in accordance with the Proceeds of Crime Act.

However, spot and random checks by HMRC have uncovered agents failing to comply with money laundering regulations, often resulting in substantial fines.

Checks last year led to HMRC issuing hundreds of penalties to all sectors – including estate agency businesses – for failing to comply with the rules.

Some agents have been hit with significant fines despite a ramping up of compliance activity, following the introduction of tighter regulations in 2017.

Research shows that there is a general lack of understanding among a high number of agents when it comes to money laundering regulations, with just 16% of agents surveyed last year stating that they had a comprehensive understanding of the rules.

One of the best ways in which to avoid falling foul of the rules is to know how to recognise and reduce risk of money laundering.

New risk assessment information has been launched by HMRC that provides estate agency and letting agency businesses under Money Laundering Regulation 17(9) with the guidance they need to carry out their own money laundering and terrorist financing risk assessment.

You can access the new guidance by clicking here.

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2 Comments

  1. Property Poke In The Eye

    AML not ML

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  2. GeorgeHammond78

    This topic seems to have ramped up in recent weeks – is it because sales/lettings volumes have taken off since un-lock and they are unable to physically undertake any of the spot checks? Our office remains closed to the great unwashed and if someone from HMRC came banging on the door, they’d be told to politely go away. Perhaps they should calm down and remember, good agents (i.e. the majority) will continue to conduct their business properly irrespective of fire, flood or, pestilence . Scummers (i.e. the minority) will always seek to the exact opposite. If it were me, I’d be targeting the conveyancers who actually convey the money rather than agents who don’t see a penny until after the event.

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