After months of uncertainty, estate agents are increasingly busy as home movers scramble to take advantage of the stamp duty holiday. However HMRC are not taking a break from scrutinising agents over their level of compliance with anti-money laundering (AML regulations).
Last month HMRC issued a fine of £266,793 to online estate agency business Purplebricks following findings that the company had breached the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
“These breaches are failures in having the correct policies, controls and procedures, conducting due diligence and timing of verification,” HMRC said in a brief statement published on its website.
In 2019 HMRC carried out a number of unannounced inspections aimed at identifying businesses who it suspected of not registering for AML responsibilities. HMRC also previously imposed a £215,000 fine on Countrywide Estate Agents for non-compliance with AML requirements.
So are estate agents – already stretched because of the Covid-19 pandemic and increased demand in the property market – likely to turn their attention to training staff on proper AML procedures at this time?
Research carried out before the pandemic by conveyancing firm iamproperty suggests that over 66% of UK estate agents are failing to comply with HM Revenue and Custom’s (HMRC) anti-money laundering (AML) expectations or the EU’s fifth anti-money laundering directive (5AMLD).
Only 46% of agents are confident that all AML regulations have been understood and properly implemented whilst less than half (40%), have failed to complete any training despite a quarter of estate agencies being fined for non-compliance in the past.
Almost half (40%) of those fined by HMRC were yet to make changes to policies or procedures concerning anti-money laundering.
The sector has been historically reluctant to complete due diligence procedures like suspicious activity reports (SARs), making up just 0.15% of the UK’s total in 2018.
Yet incidents of financial crime continue to rise. Remote working and the massive changes to working practices that agents have had to adopt in recent months means that astute criminals are targeting property transactions in order to carry out financial crime.
This has caused the UK government to single out estate agents as the ‘weak link’ in the UK’s anti-money laundering defences, and it could be set to become an even bigger issue. So while AML may not be top of the list right now, as the first line of defence against money laundering, it has never been more important for estate agents to take their obligations seriously.
The relevant regulation (24) on training says:
Estate agents are required to provide regular training to relevant employees to ensure that they are made aware of the law relating to money laundering and terrorist financing, and to the requirements of data protection. The training must be provided on a regular basis. It must also address how to recognise and deal with transactions and other activities and situations which may be related to money laundering or terrorist financing.
Legal Eye offers succinct and affordable online training to protect your business against fines from HMRC and against wider serious problems which are likely to arise as a result of your agency being party to a financial crime. Contact bestpractice@legal-eye for more information.