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Online agents and deals run bigger money laundering risks - government

The government has issued new guidance to estate and lettings agencies on their obligations regarding money laundering issues - and online agencies and deals are singled out for special attention.

“It is important that estate agency businesses and lettings agency businesses understand and meet their obligations under the Money Laundering Regulations to protect themselves, their community and the UK. Any weakness in the controls the business uses can be exploited by criminals to use, coerce or control the business to move their funds” states the guidance, issued to agents via HM Revenue & Customs.

“HMRC expects you to carefully assess and document the specific risks that you face and establish and keep up to date policies, controls and procedures to address these. These must be effective to help prevent money laundering or terrorist financing through the business” says the statement.


It goes on to say: “Property is used by criminals as an investment, to enhance their lifestyle, or to integrate proceeds of crime into the legitimate economy. The price of property in the UK usually rises over time, presenting an opportunity for criminals to increase the value of their illicit gains. Effective and comprehensive due diligence on all parties by estate agency businesses and lettings agency businesses help mitigate the money laundering risks around property.”

The guidance is extensive, emphasising that money laundering through residential property is more likely than through commercial property.

And then it says how online transactions - through online agencies or digital activities promoted by traditional agencies - runs higher risks.

“Face-to-face contact with a customer offers an opportunity to interact personally. Transactions made online, over the phone or via an intermediary reduce this exposure to the customer, decrease effective identification, and increase vulnerability to money laundering.

“This is particularly true when dealing with customers in higher-risk overseas jurisdictions. Transnational estate agency services are low cost and are readily available online. Services can be provided anonymously, and these are being marketed to offshore clients. 

“However, both the source of offshore funds and the beneficial owner can be difficult to validate, with money launderers taking advantage of cross-jurisdictional language, identity and legal complexity barriers.”

The guidance then gives substantial detail on potential risks and how to identify them, plus responsibilities on agencies to notify authorities of suspicions that may arise with clients.

The references to online agencies appears timely: in August this year it was revealed that Purplebricks was fined £266,793 by HMRC because of non-compliance with anti-money legislation.

You can see the new HMRC guidance here.


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