HMRC data showing more than £1m of anti-money laundering (AML) fines to estate and lettings agents should be a “wake-up call” for the industry, a legal expert claims.
The latest data from the taxman shows more than £1.2m of fines were handed to agency firms in the final six months of 2022 for AML breaches.
Mark Jones, partner at London law firm Payne Hicks Beach, has queried if this is providing enough of a deterrent given that these fines keep happening.
He suggested that HMRC may increase the number of prosecutions and get the message out to demonstrate a harsher stance and the courts could then look to force the point home. He also predicted that the punishments from HMRC are likely to get harsher until the message gets through.
Jones added: "These latest fines, taken together with previous fines issued in the same sector, highlight that there is an ongoing pattern of non-compliance within the estate agent and letting agent sectors. Of course, the vast majority in the sector do comply with the rules but a small number of businesses are still failing to comply.
"At the same time, HMRC is demonstrating that it will not hesitate to take action against those businesses who fail to comply.
“Whether or not this will be a wake-up call for the industry remains to be seen, given that previous fines and the surrounding publicity have resulted in little improvement, if any. Last year also saw HMRC’s first criminal prosecution of an estate agent for trading without registering with HMRC which resulted in a fine of over £53,000.”
He highlighted that the property industry has long been considered a target for criminals to launder money, adding: “Bringing the industry into the regulated sector was designed to address this. Given the current climate and sanctions regime it has never been more important for the industry to be aware of its money laundering obligations.
"The message is clear, that if businesses do not comply with the rules they face significant fines, potential prison sentences and untold reputational damage which may impact their ability to continue trading. The take-away: fail to comply at your peril."
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Personally I just don’t get how estate agents that only deal with sales and don’t handle any cash are in the firing line for money laundering. Maybe I’m being stupid but surely it’s the solicitors who handle the cash that that can see where it’s coming from. Apart from basic proof of funds checks (which aren’t that hard to come up with) Estate Agents are not in a position to deep dive into buyer’s finances. They’re not our clients. If the seller has bought the house with illegal cash in the past how on earth are we supposed to know that? Apart from someone walking through my door and saying ‘ Just bought this for £1m cash and want to sell it really quickly, happy to get anything over £800k’ Hmmmmm!
Simple... its a tax.
I completely agree - its (yet another) nonesense, badly thought through.
You are not beign stupid - these rules are!
The Tories, when they came into power all those years ago, were supposed to have a bonfire of regulations/legislation. Instead - along with these crazy rules, they built a massively bigger Bonfire - they have made a standard tenancy agreement from 13 pages to about 40, most of which is even more complete stupidity.
Its just a money making racket in the same way as TV licensing, Fishing Rod licensing and Speed camera fines etc
Do you know anyone who has been killed by a speeding driver
I guess not
Estate agents selling property are not handling cash and do not have client accounts to hold cash. They do not have the ability to scrutinise the source of buyers funds in their entirety other than asking for basic proof of funds documents and what is the point in them AML checking a seller, the title deeds will confirm proof of ownership and authority to sell, which the solicitor will check? A typical property purchase will involve the buyer having three AML checks carried out on them, one by their mortgage lender, one by their solicitor and on from the estate agent. This is complete overkill and surely the buck should stop with the solicitor. If estate agents are selling to cash buyers where no mortgage was involved, then this would require vigilance and they should be aware of SAR. However, the vast majority of property transactions involve a mortgage lender and 99.9% of transactions will involve a property lawyer acting for both buyer and seller. Estate agents should not be required to ID check buyers and sellers to the extent that they do. Why can't the agent rely on the solicitors AML checks? Where are Property Mark on this, are they lobbying the government?
It looks like a tax for non compliance and I bet there are still thousands not registered for AML. You only get fined when you register and HMRC back date the months and form a fine from a completely made up matrix. That is based on what they think the estate agent can easily afford without either challenging or going into administration. Like a parking fine you get a discount for an early settlement.
But the moral of the story is we do not handle money and HMRC know it but see this as easy pickings.
I heard the government were targeting £100 million in fines this is just the tip of the iceberg currently.
It's a ghastly piece of legislation and should be agressively challenged in the courts. This is what comes of estate agents not having a representative voice that has their back.
Why is there not a trade body / industry body which actively campaigns against this nonsense. I would gladly pay membership fees to a body which agressively challenged the poorly constructed, nonsensical legislation which regularly flows out of parliament with no other purpose than to criminalise ordinary people going about their day job.
If you want to understand how Propertymark played their roll in all this I suggest you simply google
"Mark Hayward Select Committee Money Laundering" and read Mr Hayward's submissions to the Treasury Committee regarding economic crime back in june 2018. It tells you everything you need to know.
The whole registration and payment process for AML is a scam. Agents getting fined for not renewing on time or the process taking weeks on weeks to register is just not fair.
Getting fined for actual breaches is fair enough but that isn't what they are being fined for.
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