Dozens of estate agents have been fined a combined total of £519,645 for failing to meet their obligations under anti-money laundering rules, and AML firm SmartSearch is warning that it is now a question of ‘when’ and not ‘if’ for those who are still failing to comply.
Following the announcement that HMRC has added 68 estate agents to the list of named businesses not complying with the rules designed to stop criminals from laundering dirty money, Martin Cheek, MD of SmartSearch says any agents that do not have the correct procedures in place should expect HMRC to come knocking.
“This latest round of fines and ongoing pattern of non-compliance clearly shows not only the urgent need to improve standards within the estate agency sector, but also that HMRC is not afraid to take action,” he said.
“It should therefore come as a stark warning to estate agents that if they don’t have AML processes in place, they will be penalised. It should also act as a wake-up call to other regulated sectors to up their game, as this latest round of penalties also sees the first business in the arts sector being fined.”
And, says Cheek, the consequences of non-compliance can be more serious than fines - an estate agent was recently prosecuted for trading without registering with HMRC.
“While the agent in question – the first to be prosecuted for failing to register with HMRC - escaped jail, HMRC has announced it is currently investigating a number of other cases of businesses failing to register whilst trading, which could lead to prison sentences of up to two years and an unlimited fine,” he said.
Cheek says that as HMRC continues to take action against those who ignore their legal responsibilities, the case for digital onboarding, electronic verification and enhanced due diligence becomes stronger than ever.
“The property sector has long been a target for criminals to filter dirty money, and for many years now, that has meant that property professionals – like estate agents - are often the first line of defence against money launderers.
“In the current climate, where threats and therefore, restrictions are growing – a recent example being the sanctions imposed against Russia – it has never been more important for estate agents to take their obligations seriously.
Cheek says now is the time to try and encourage a shift in mindset amongst estate agents, not only to take the threats on money laundering - and the consequences of failing to prevent it – seriously, but also to realise the advantages of utilising the latest innovations and technology available.
He concluded: “Electronic AML and sanction procedures are not only far more efficient and robust, but make business sense, as they can be integrated with existing systems and procedures making for a smoother, quicker and more cost-efficient process, enabling estate agents to comply with rules and avoid fines, while also improving their internal processes and creating a much more pleasant onboarding experience for their customers.”
*Martin Cheek is managing director of SmartSearch
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Good article. Thank you for sharing
All true, but lets not mislead agents into thinking that KYC checks whether manual or digital ticks the AML box, which is the main reason a great number of them are not up to speed. HMRCs requirements extend far further than that with the necessary processes, policies, RAs, training and reportage that needs to be in place.
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