Propertymark, the UK’s leading membership body for property agents, has called on HMRC and the Treasury to improve guidance on anti-money laundering (AML). According to Propertymark, while the vast majority of estate agents are committed to AML compliance and 95% carry out the required checks, many are confused about customer due diligence.  

In March 2024, HM Treasury (HMT) published its consultation on improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs). In addition to other core themes, the consultation looked at how to make customer due diligence more proportionate and effective and how to provide additional clarity on the scope of the MLRs. The consultation closed on 9 June 2024. Responding to the consultation, Propertymark said: “Much of the guidance provided by HMRC focus on when to carry out checks and not how they can be completed effectively.” 

Agents risk the wrath of HMRC if they do not comply with the latest AML regulations:   

• Estate agents were fined a total of more than £3m in the nine months to September 2023 for failing to register for money laundering supervision 

• In April 2024 it was revealed that more than 250 estate agencies had been fined a total of over £1.6m for breaching anti-money laundering requirements. 

With such high stakes, more needs to be done to ensure agents are meeting their compliance requirements.  

Do estate agents require more rigid AML guidance?

Yes, according to Propertymark. It believes more prescriptive guidance and practical examples will help agents better understand their responsibilities, especially when it comes to more complex matters such as identifying beneficial owners and sources of funds. It also said:  

• 96% of surveyed members welcomed more prescriptive guidance 

• Half of the surveyed members do not currently accept digital identities for AML checks. Not least because there is a lack of trust in third-party services 

• 84% said more comprehensive guidance and a central database to help screen out fakes would encourage them to start using digital identities. 

Estate agents play a critical role in safeguarding the integrity of the property market from financial crime. However, understanding their various AML responsibilities can be challenging. As such, any help from HMRC and HMT in this area is welcome. In the meantime, there are things agents can do to boost compliance and help combat dirty money in the UK.  

What can estate agents do to boost AML compliance?

• Register with HMRC for AML supervision. It’s a criminal offence to trade as an estate agency business without being registered.  

• Conduct thorough background checks on all clients. This includes verifying their identity and understanding the source of funds (SoF) and source of wealth (SoW).  

• Conduct more detailed investigations for high-risk clients, particularly those from jurisdictions with a high risk of money laundering.    

• Be vigilant for red flags such as clients unwilling to provide information, unusual payment methods, or transactions significantly above market value.   

• Report any suspicious activities via a Suspicious Activity Report (SAR).  

• Train staff on AML regulations and the latest money laundering techniques to keep everyone vigilant and compliant.   

• Ensure robust internal policies and procedures to detect and prevent money laundering.  

• Source trusted AML software to automate aspects of the due diligence process, reducing human error and increasing efficiency.  

Speak to our specialist estate agent compliance advisers

Providing sound knowledge, practical solutions, and AML training, we help our estate agent clients understand the regulations and industry requirements and adapt their processes and procedures accordingly. Find out more about our Estate Agent AML Support Services, or get in touch today for an initial chat about how we can help. Email [email protected] or call 020 3051 2049