AML Alert: HMRC levies fines on hundreds of estate agents

According to the latest HMRC figures, over 200 estate agency businesses were fined for anti-money laundering (AML) failures between April and September 2023. HMRC’s fines to 254 firms ranged from £1,500 to over £50,000. The total cost to estate agents was more than £1.6 million. In response, experts have queried why some estate agents seem reluctant to meet their AML obligations.  

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 places specific obligations on estate agents. Failure to meet these requirements can lead to fines, reputational damage, and even closure. One of the core duties placed on agents is the need to register for AML supervision with HMRC, but the latest fines show that, in many cases, this still isn’t happening.  

To register with the regulator, estate agents must have documented risk assessments, policies, controls, and procedures (RA/PCP), or have them in place 21 days after application. HMRC only accepts applications from businesses that have done the necessary preparation. In late 2023, following a rise in applications for AML supervision from agency businesses that did not have the required risk management procedures, HMRC contacted estate agents to remind them of their responsibilities. 

At Legal Eye, we believe that, for many agents, the lack of registration is likely to stem from uncertainty over what exactly is required regarding AML, rather than a belief that the regulations do not apply to them. As such, helping estate agents get to grips with their compliance requirements is vital. 

How can estate agents ensure they’re compliant with AML regulations? 

Estate agents must maintain a thorough, written AML policy statement and accompanying PCPs. These need to be current and relevant to deter money laundering. Adequate staff training is essential to ensure comprehension and enforcement of these policies. 

The requirements cover things such as:  

  • Conducting customer due diligence (with an emphasis on client ID checks)  
  • Verifying the sources of funds and wealth, as necessary 
  • Promptly reporting any suspicious activities. 

As mentioned, agents must also register with HMRC for AML supervision.  

Meeting the necessary AML requirements can be a challenge, especially when agents are under significant pressure. When trying to balance a plethora of tasks, AML compliance can be an additional and unwelcome frustration. Nevertheless, to stay on the right side of the law and avoid the wrath of HMRC, compliance is non-negotiable.  

At Legal Eye, we provide practical and affordable outsourced risk and compliance support to estate agents. Providing sound knowledge and practical solutions, our team of experienced associates will help you understand the regulations and industry requirements to adapt your processes and procedures accordingly.   

By helping our clients build a robust compliance culture with everything they need to meet their evolving AML requirements, we free up estate agents so they can concentrate on the critical task of selling and letting properties. 

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