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Unannounced inspections from HMRC in money laundering crackdown

Monday 04 March 2019

Details have been published of businesses who have received penalties from HMRC for not complying with the Money Laundering Terrorist Financing and Transfer of Funds Regulations 2017.

As part of a week-long crackdown, HMRC conducted over 50 unannounced visits to estate agents across England last week, who were suspected of trading without being registered under the money laundering regulations. The estate agents visited were in London (35), Leicester (5), South Bucks and Berkshire (4), Greater Manchester (3), Watford (1), Wakefield (1) and Wolverhampton (1).

This is the first week of action involving intelligence-led, co-ordinated activity. The visits involved HMRC inspectors questioning the businesses to establish if they were in breach of the regulations with further assessment to see what action was required. HMRC supervises more than 11,000 residential and commercial estate agents across the UK and helps these businesses protect themselves from criminals who use property sales to launder cash or finance terrorism.

Strong words of warning

John Glen, Economic Secretary to the Treasury, said: “The vast majority of estate agents play by the rules and help us to crack down on dirty money. But I have zero tolerance for firms prepared to turn a blind eye to the law. Money laundering regulation exists to help protect honest business, so anyone who flaunts the law should know that swift action will be taken.”

Ben Wallace, Minister for National Security and Economic Crime, said: “Criminals who seek to use this country as a place to launder money should be in no doubt that they have nowhere to hide. Estate agents are a crucial line of defence against them and that’s why they’re under a legal – and moral – obligation to file a report when they spot something amiss.”

“It’s wrong to think of money laundering as a victimless crime. Those with dirty cash to clean don’t just sit on it – they reinvest it in serious organised crime, from drug importation to child sexual exploitation, human trafficking and even terrorism.”

Simon York, Director of HMRC’s Fraud Investigation Service, said: “Estate agents need to understand that criminals’ prey on weaknesses, so it’s vital they take all steps to protect themselves. The money laundering regulations are key to that, but there’s still a minority of agents who ignore their legal obligations. These inspections are a wake-up call that if you continue to trade illegally, we will come knocking.”

The UK was rated as having the most robust processes in the world for tackling money laundering by the Financial Action Task Force in a recent report. Over the past 3 years, HMRC carried out more than 5,000 interventions on supervised businesses, with 655 penalties worth £2.3 million issued in 2017 to 2018. In addition, HMRC recovered over £31 million under the proceeds of Proceeds of Crime Act.

How to comply with the Anti-Money Laundering Regulations

Businesses must register with HMRC and ensure they comply with their obligations under the regulations, for example, by ensuring they have adequate policies and procedures in place. Senior managers (director, manager, company secretary, chief executive, member of the management board) are personally liable if they do not take steps necessary to protect their business from money laundering and terrorist financing.

There are various tools and resources to help you comply with the regulations by having a nominated ‘money laundering reporting officer’ (MLRO) in place to report suspicious activity to the National Crime Agency (NCA) in the form of a SAR (Suspicious Activity Report), which is the best way to alert the NCE of suspected illegal activity.

Knowing the signs, reporting the crime

So how do you spot financial crime? There are lots of red flags for potential money laundering activity which you and your staff should make sure you are familiar and be alert for them when dealing with both new and existing clients

The Government backed a campaign - Flag It Up – that haslots of property industry specific resources available to download. There are customisable posters to print off to display in your offices to remind staff of the role they must play and the action they need to take should they suspect something. There are also ready-made images to use on your social media channels.

Guidance, Training, Roadshows and Resources from Propertymark

Propertymark has various resources, links to HMRC guidance, training courses and other resources which will help you to comply with the regulations – view full details

Our members' only AML - How to comply guide will explain in more detail the steps that business should take to ensure compliance with the regulations. You can also pick up a printed copy at one of our workshops. 

For the latest updates, including what to expect from the forthcoming fifth Money Laundering Directive, you should attend one of our many events taking place throughout 2019 and nationally. Our Roadshows take place during May in London, Leeds, Stratford-upon-Avon and Exeter. Or find a regional conferences or workshops near you.

We also offer three AML courses - at foundationintermediate and advanced levels, so whatever your level of experience there will be something to suit you.  

Further information

List of businesses not complying with the Money Laundering Regulations 2017
Educational resources for estate agents on Money Laundering Regulations on GOV.UK
Anti-Money Laundering Toolkit