Sharp rise in AML fines for estate agents

Anti-money laundering fines issued to estate agents has increased by 980%, totalling £772,618 in the last year, alarming new figures show.

Sector data analysis and insight by Credas Technologies, an identity verification checks provider, reveals that estate agency fines have increased despite a near 19% drop in overall anti-money laundering fines issued in the past year.

The government has made it a legal obligation for the business sectors defined by the Money Laundering Regulations – such as estate agents, accountants, financial service businesses, and solicitors – to register for anti-money laundering (AML) supervision from HMRC, officially known as Economic Crime Supervision.

If a business covered by these regulations is deemed to have insufficient AML practices, monitoring, and precautions in place, HMRC is able to issue significant fines.

The latest analysis of the data by Credas Technologies shows that the total sum of fines in the UK has fallen by 18.8% year-on-year, down from £3m in 2020/21 to £2.5m in 2021/22.

Despite this overall drop, two particular industries have seen enormous increases in fines: Accountancy Service Providers have seen fines increase by 1,083% in the past year, while fines for estate agency businesses have surged.

However, not only are these sectors some of the most vulnerable and high-risk industries, but previous analysis by Credas Technologies found that the estate agency leads the way when it comes to new AML registrations and the sector accounts for a sizable proportion of all AML registered businesses. As a result, a higher level of fines issued is only to be expected given the sectors greater acceptance of AML compliance.

What’s more, the total sum of fines issued to estate agency businesses since the start of the pandemic (2020 to 2022) is actually 41% lower than the total sum of fines issued in the two years prior (2018 to 2019).

In the two years prior to the pandemic, the sector paid a total of £8.215m, but in the last two years, this has fallen to just over £4m.

The only industry to have seen the total sum of fines increase during the pandemic is accountancy, up by 483%.

Tim Barnett, CEO of Credas Technologies, commented: “At a glance, it may seem as though estate agency is very much the bad egg of AML compliance, with a huge annual increase in fines issued, surpassed only by accountancy service providers. However, this is perhaps a little unfair and there are a few factors that are important to consider here.

“First of all, the property industry was not only locked down for a period of time due to Covid protocols, it then experienced an unprecedented period of boom which is yet to show any signs of slowing. With many firms also fighting tooth and nail to adapt to a changing landscape, there was always likely to be a period of adjustment and, when coupled with a far higher rate of output, an increase in AML compliance slip ups.

“Secondly, estate agency has been leading the charge when it comes to the number of new businesses registering for AML compliance and so this will naturally lead to a greater level of fines when compared to other sectors.

“Finally, when you compare the level of fines issued since the start of the pandemic versus the two years prior, the estate agency sector has actually seen a 41% reduction. So, while there may have been an annual spike as the industry has sprung back to life, the estate agency sector has actually seen a reduction in AML fines issued during the pandemic as a whole.”

 

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