The fight against money laundering in the property sector has gained momentum, with estate agents significantly ramping up anti-money laundering (AML) checks. This surge can be attributed to a combination of factors, including increased regulatory scrutiny, high-profile cases of money laundering, and a better understanding of the risk.

According to a recent report, AML checks surged by 59% in the first quarter of 2024, underscoring a growing commitment to regulatory compliance. In total, 409,265 AML checks were conducted in Q1 2024, compared to just 257,082 in the same period last year.

Estate agents and AML fines

The UK’s AML regulations demand strict adherence from estate agents to prevent the infiltration of illicit funds into the sector. The consequences are severe, as failure to meet these obligations can result in heavy fines, reputational damage, and even the closure of your business.

According to HMRC, the industry’s AML supervisor, over 200 estate agency businesses were fined more than £1.6 million for AML failures between April and September 2023. The individual fines ranged from £1,500 to over £50,000. This underscores HMRC’s strict stance on AML and the significant financial penalties that non-compliance can incur.

Property and the money laundering risk

Property transactions in the UK are a significant target for money launderers due to the high value of assets and the complexity of property deals. Criminals often use real estate to disguise illegally obtained funds by purchasing properties through shell companies or using anonymous buyers. With nearly 40% of the dirty money in the world going through the City of London and other crown dependencies, the sector is highly vulnerable to exploitation.

Don’t risk getting left behind

Staying compliant is not just an option—it’s a business necessity. With HMRC adopting a more stringent stance, your agency must have robust AML processes and procedures in place. Not just to meet your legal obligations, but also to protect the integrity of the market and stay ahead of the competition.

Amongst other things, this means:

• Registering with HMRC for AML supervision
• Maintaining a thorough, written AML policy statement and accompanying PCPs
• Keeping these up to date to deter money laundering
• Carrying out adequate staff training to ensure comprehension and enforcement of all relevant policies
• Conducting customer due diligence (with an emphasis on client ID checks)
• Verifying sources of funds and sources of wealth
• Promptly reporting any suspicious activities.

Complying with AML regulations can be challenging, especially when estate agents are juggling multiple responsibilities. Meeting these requirements can feel like an added burden amid a busy workload. However, there’s simply no room for error when it comes to AML rules.

At Legal Eye, we help our estate agent clients build a robust compliance culture with everything they need to meet their evolving AML requirements. If you haven’t already, contact us for a full audit of your AML procedures and ensure this vital part of your operations is compliant, adequately documented, and up-to-date.