Updated Money Laundering Risk Assessments
The risk of money laundering in the property sector has been assessed as ‘high’ in the National Risk Assessment 2020 (‘the Assessment’) published at the end of last year.
The services of estate agency businesses and letting agency businesses are assessed as ‘medium’. This is the first-time certain letting agency businesses have been included in the Assessment. Letting agents who act on lettings for more than a month and where the monthly rent is equivalent to 10,000 euros fall within the 5th Money Laundering Directive.
The Assessment states that the property sector is being targeted by criminals as property is an asset whereby criminals can hide their proceeds of crime and the asset often appreciates in value over time. Company structures can be put into place to hide the identity of the individual.
Law enforcement agencies have confirmed that only half of estate agents are registered with HMRC and many agencies are in breach of the money laundering regulations; failing to have adequate policies in place, failing to train staff and staff are over relying on prop-tech to carry out due diligence without understanding the process. Failure to comply with money laundering regulations can result in civil penalties or criminal prosecution.
Following the Assessment, the Government updated its estate agency business risk assessment which now also includes certain lettings agencies which can be found here . It is important that regulated agencies review their existing policies to ensure that they are in line with the latest Assessment and Government guidance.
The template Client Identification and Risk Assessment forms have been updated, in line with the Government’s updated risk assessment. More risk indicators have been included, to assist agents in spotting money laundering behaviours.
There are a number of templates to assist both residential and commercial agents with money laundering regulations. The templates are intended to be a starting point to assist you in implementing the requirements set out in the legislation and guidance to suit your business and practices.
Government guidance specific for regulated lettings agencies is still awaited. The templates will be updated, where necessary, once this has been published.
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.