Fines for non-compliance with anti-money laundering (AML) regulations for real estate agents have risen rapidly over the past 12 months, recent research shows.
The latest analysis by identity verification checks provider Credas Technologies has revealed that the average AML fine issued to estate agents in the 2022/23 financial year was £5,350, an increase of 49% compared to the previous year.
The data means that estate agency businesses received the fourth largest average fine issued this year to date, coming slightly behind letting agencies, which received an average fine of £9,050, and art market participants, which received an average fine of £10,000.
Money service businesses have been issued with the highest fines, being hit with an average of £1.5 million.
The increase reverses the previous downward trend within the real estate agency sector, which had seen the average AML fine drop year on year since 2019. The upturn in fines for non-compliance is being attributed to difficult market conditions.
Tim Barnett, chief executive of Credas Technologies, said: “Although the estate agency sector remains one of the most frequently penalised for AML breaches, the average fine issued had been in slow decline, indicating that the industry was very much heading in the right direction.
“However, this positive trend has, so far, been reversed this year. This highlights the far tougher landscape we’re facing at present, with many agents likely feeling the pressure of an uncertain market.
“As a result, it’s likely that they have been focussing their attention on overcoming the problems facing them, with AML due diligence being put on the backburner, albeit with often costly consequences.”
Estate agencies have been fined a total of £2.5 million in penalties for non-compliance since AML supervision was introduced in 2017–18. This ranks second across all supervised sectors, behind money service businesses, which have received a total of £6.2 million in fines.
The latest fines reinforce the importance for estate agents and other regulated firms to implement and oversee comprehensive and cohesive compliance programmes. Procedures and policies should be regularly reviewed to ensure they comply with requirements and ensure firms do not fall foul of the law.
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