This June sees the introduction of the 4th Money Laundering Directive, with estate agents singled out for increasingly stringent money laundering and terrorist financing vetting.
Agents have been required to comply with Money Laundering Regulations for several years, but these have become tighter and more onerous as time progresses with no sign of any let up.
Estate agents are defined as those who are involved in the sale and purchase of land and property.
This is a bit of an anomaly (no lettings?) and was surprisingly not changed when the new Regulations were announced.
Letting agents should however be aware of the “occasional transaction” requirements of the Regulations that make any transaction over 15,000 Euros liable to Money Laundering procedures and compliance.
Estate agents must be registered with HMRC, have a written Money Laundering Policy statement (these will need updating to meet the new regulations), have a nominated Money Laundering Reporting Officer, have systems and processes in place to manage and mitigate risk, train staff and keep records.
The new Regulations will also make it a requirement on agents to not only carry out Customer Due Diligence (CDD) on seller clients but on buyers too.
Agents acting as sub agents will now be able to rely on the main agent’s Customer Due Diligence when marketing a property, providing they are satisfied that it is robust.
The introduction of Persons of Significant Control Registers last year made it easier to obtain information on UK company ownerships and it is planned that companies will have to provide this information within 48 hours or face penalties.
Estate Agents must haves from June onwards:
be registered with HMRC
have a written Money Laundering Policy statement
have a nominated Money Laundering Reporting Officer
have systems and processes in place to manage and mitigate risk, train staff and keep records
carry out Customer Due Diligence (CDD) on seller clients but also on buyers
HMRC are conducting random spot checks on estate agents and dishing out hefty 5 figure fines for non-complianceEstate agency businesses need to ensure that these regulations are taken seriously as spot checks and investigations by HMRC have resulted in fines costing many tens of thousands for non-compliance.
Requirements for independent audits and possible “criminality” checks on staff demonstrate the toughening up of the regime.
Agents may not have realised it when they started their careers in property but they are now certainly in the front line on the war on crime and terror!
Michael Day MBA FRICS FNAEA of Integra Property Services has over 40 years industry experience with over 1000 delegates attending his Consumer Protection and Money laundering training courses. His next course is in London on 21st June – click here for more details. Michael can be contacted at email@example.com or by phone on 01753 889287.