New Anti-Money Laundering Documents
Estate agents and their obligations under The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘the Regulations’) have been in the spotlight following a series of events; 1) Estate agent Countrywide received a £215,000 fine for money-laundering failures following a high-profile crackdown in March 2019 by HMRC; 2) Estate agents were criticised for failing to protect the UK from the proceeds of corruption by the Treasury Select Committee in its report on economic crime in March this year; and 3) Updated guidance was recently issued by HMRC in May this year to assist agents in their obligations to prevent money laundering and terrorist financing.
In light of these events estate agents are likely to face further scrutiny, investigations and inspections and all estate agents should review their policies and procedures to ensure that they are compliant with the Regulations.
Although estate agents don’t handle transaction monies, they are often the first port of call in a property transaction and so they are best placed to identify and verify the parties to a transaction and report any suspicious activity at the outset of the transaction.
Estate agents are regulated by HMRC. A regulated business must comply with the Regulations. The Regulations require estate agents to put in place a number of policies, controls and procedures to anticipate and prevent their business being used by criminals to launder money and fund terrorism.
Failure to comply with the Regulations can result in civil penalties or criminal prosecution. Senior managers and nominated officers can also be found personally liable for a breach of the Regulations.
New Estate Agents Anti-Money Laundering Policies for Residential and Commercial Property
Two anti-money laundering policies for estate agents: 1) for use by agents that deal with residential property; and 2) for use by agents that deal with commercial property.
The Regulations require estate agents to have a written anti-money laundering policy in place to make staff aware of money laundering, prevent money laundering taking place and assist staff if any money laundering activity is suspected. A copy of the anti-money laundering policy must be given to all staff along with anti-money laundering training for all staff.
New Commercial Property Estate Agency Client Identification Form and Risk Assessment Form
A new identity form and risk assessment form to assist estate agents dealing with commercial property to comply with their obligations under the Regulations.
Updated Estate Agency Client Identification Form and Risk Assessment Form (Residential)
Updated identity form and risk assessment form to assist estate agents dealing with residential property to comply with their obligations under the Regulations.
New Estate Agency Firm Wide Risk Assessments
Two new firm wide risk assessments for estate agents: 1) for use by agents that deal with residential property; and 2) for use by agents that deal with commercial property.
At the time of writing letting agents do not have to comply with the Regulations although this is due to change with the 5th Money Laundering Directive (which must be implemented by EU member states by January 2020) and is likely to be implemented by the UK even if the UK has left the EU by then.
Although estate agents (that also carry out lettings work) currently do not need to carry out anti-money laundering checks in respect of their lettings work (unless the rent is paid up front in a one off transaction worth 15,000 euros or more) they will still need to report any suspicious activity that they become aware of in their lettings work.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.