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22 May 2020

A five-phase route map was released on 21 May, with a brief mention in Phase One about the safe reopening of the housing market. Read More...

Scottish Government to introduce additional changes to the property sector

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21 May 2020

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Understanding your AML obligations

Wednesday 14 February 2018

As the clamp down on anti-money laundering compliance continues, you should by now have addressed the legal requirements of the regulation.

But whilst the forthcoming Sanctions and Anti-Money Laundering Bill (which is currently working its way through the House of Commons) has raised the public profile of corruption, there still appears to be widespread confusion within the industry as to compliance requirements.

Estate agents continue to be at risk of fines from HMRC, and with an increased crackdown on non-compliance activity, there are worrying gaps in understanding when it comes to anti-money laundering obligations.

As part of the existing Fourth Money Laundering Directive introduced last June, checks are now required to be undertaken on both vendor and purchaser, however many agents appear to be unsure at what point these need to take place or who even polices compliance matters. 

One of the areas of most concern is understanding the importance of demonstrating a risk-based approach. Estate agents are required to have a process in place to identify the level of risk posed by the individual to the business from an AML perspective, with each client being assessed individually and an appropriate level of check applied. But while management and business owners seem to demonstrate a good understanding of this, it is not always being disseminated to front-line staff, which could make your business a target.

What you need to know

Last year alone, more than 880 fines and penalties were issued for failure to comply with anti-money laundering rules. With HMRC proactively policing the sector, it is even more important for property professionals to stay up-to-date with the approved regulations. So what action do you need to take in order to be compliant?

  • Appoint a Compliance Officer who is responsible for the oversight of compliance, relevant legislation, regulations and industry guidance;
  • Assess and manage money laundering and terrorist financing risks to the business;
  • Use risk-based customer due diligence procedures, including enhanced due diligence for customers presenting a higher risk;
  • Establish a system of identifying and reporting on money laundering and terrorist financing risks and suspicions, internally and to the relevant law enforcement authorities as appropriate;
  • Store, maintain and back-up appropriate records for the minimum prescribed period (usually five years);
  • Introduce measures to ensure that you and your staff are alert to, and are addressing money laundering and terrorist financing risks in the day to day operation of the business;
  • Provide regular training and awareness for all relevant employees on legal and regulatory responsibilities.

Ignoring your obligations is not an option. Estate agencies are particularly vulnerable as property continues to be an attractive vehicle for criminal investment, particularly for high-end money laundering, and failure to comply with the regulations could result in hefty penalties or prosecution.

Read the Government guidance here

Help is available!

Here at NAEA Propertymark, we have put together a toolkit which includes a risk assessment questionnaire, an identification verification form and guidance from the Home Office, in order to help you comply.

We want to get you up to speed as quickly as possible, that is why our free to attend Masterclasses will continue to focus on anti-money laundering changes for the remainder of 2018. We have also added new dates for our Financial Crime Update course, and have introduced a brand new online course for 2018 which provides an introduction to anti-money laundering.

Our AML app is also on the way, so watch this space for more info!

In the meantime, we have a dedicated legal helpline that offers free, impartial advice as part of your membership benefit package. Our team of legal experts specialise in offering practical, professional assistance across a range of compliance matters that impact the estate agency sector - so if you have a question, give them a call.