Estate Agents Hit With £1.6m AML Fines

More than 250 estate agency firms have been fined in excess of £1.6m for anti-money laundering (AML) breaches, according to a report by online membership organisation Propertymark.

HMRC has imposed the fines for a variety of non-compliance issues, including failure to register their business, missing documentation, incomplete due diligence, and failure to recognise specific risks, such as Politically Exposed Persons, high-risk jurisdictions, companies, trusts and sanctions.

Financial penalties handed to firms range from £1,500 to £50,000, with 254 estate agents receiving sanctions for non-compliance with the Money Laundering Regulations 2017 (MLR 2017).

Under MLR 2017, it is a criminal office to trade as an estate agent, high-value dealer, or property auctioneer without being registered with HMRC for AML supervision.

Letting agents must also be registered with HMRC if they deal with properties that have monthly rents equivalent to €10,000 or more.

In addition, the Fifth Money Laundering Directive requires estate agencies to have procedures in place to anticipate and prevent money laundering, reducing the risk that criminals may exploit the sector for financial crime.

Somes of the steps agents must take include:

  • Develop a written, up-to-date risk assessment of the location operating in, customers and the value of transactions undertaken.
  • A written policy statement and procedures to show how the business will manage the risks of money laundering.
  • Train and support staff to understand and implement these policies.
  • Ensure procedures and audit processes are applied to all branches in or outside the UK.
  • Appoint a nominated officer (Money Laundering Reporting Officer) to report suspicious activity to the National Crime Agency (NCA).
  • Ensure suitable control measures are in place.

The latest fines act as a reminder to agents that they must comply with their AML responsibilities.

Paul Offley, compliance officer at The Guild of Property Professionals, says lettings and estate agents should periodically conduct compliance control checks to ensure they are following the correct guidance and procedures to comply with HMRC regulations.

According to Offley, the first thing agents should do is log in to their Government Gateway account, go to the AML section, and check that their supervision status is showing as ‘supervised’ or ‘pending and able to trade’.

“It is possible to miss a renewal and the supervision status lapses, so it is important to check this to ensure the correct status is reflected,” he says.

Offley says the next aspect agents should check is their AML Business Risk Statement (Regulation 18 Risk Assessment). “This isn’t the AML policy, but rather the statement that the agent prepares based on the transactions they deal with and the customers that use them.”

“This is a document that the business will need to have as part of their governance and is a document that should be reviewed on an annual basis to make sure it still reflects both the type of transactions and customers the business deals with. If out of date, ensure that it is amended appropriately,” Offley advises.

Once the Business Risk Statement has been checked, the agent can review their AML policy.

“This would be the document outlining how the agency is going to meet the AML guidance required by HMRC. The policy should reflect what happens in the organisation with regard to AML, looking at how the agent will do their checks, who they are going to check, and the process.

“If any procedure changes within the business, this should be updated within the AML policy to ensure that it reflects the current practises within the agency.”

Business owners should take some time to read through this policy and ensure that it reflects the processes and procedures within the business, demonstrating how HMRC guidance is adhered to, says Offley, who believes it is good practice to undertake this once a year.

Offley also reiterates the requirement to demonstrate the training provided to staff over a 12-month period.

“Business owners will need to demonstrate a record of the training their staff attended, detailing the date, who it was led by, and course content. This can be as simple as internal briefings, a webinar or article relating to AML, as long as it is put on record,” says Offley.

Control testing should also be undertaken and documented to check AML policies and ensure compliance.

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We can help organisations of all shapes and sizes from across different sectors undertake a review of their policies, controls, and procedures to ensure that they are compliant with AML regulations and, therefore, avoid any breaches.

A review of this nature provides valuable insight into a business when performed correctly. Along with an overview of risk, these crucial assessments also highlight issues within the business, so it is essential to undertake a proper review. All of a company’s building blocks must be considered, including its staff, clients, operations, and finances.

By working with AML & Compliance, a business can be assured that we will bring the required level of knowledge and expertise needed to perform the review, which adds value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that include:

  • Consultancy.
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  • Training.
  • Handbooks.
  • Auditing.

Our services focus on businesses’ Anti-Money Laundering and Regulatory requirements through the implementation of effective policies, procedures, training, and consultancy. We also provide continued monitoring of staff and ongoing training to ensure that everyone within a business is aware of the latest requirements and complies with their responsibilities.

We offer a full range of services focused on ensuring businesses across all regulated sectors create, maintain and evidence their compliance with the requirements of their regulators and legislation. We work with businesses of all sizes, from the smaller high street or niche businesses to the large multi-office and multinationals.

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