Money laundering compliance is the hot topic at the moment, with various organisations making statements about the need to change and tighten up estate agent regulation.
The focus for this attention has primarily come about because of the Central London property market, which is a distortion of the general situation around the country.
The Money Laundering National Risk Assessment Report recently published by government places estate agency at a medium risk level, well below bankers, solicitors and accountants. But as usual the focus is on estate agents.
Nowhere can you find any support for the vast majority of diligent agents outside (or inside) London. I believe it's about time someone put forward a supportive view and an obvious solution to the problem.
As a compliance specialist I have worked with and advised hundreds of agents around the country on complying with these and the other regulations.
From this work it's clear to me that a substantial proportion of agents make real efforts to comply. For some, this effort verges on obsessive, because of the media publicity surrounding HMRC penalties.
It has to be said that there are a minority who do not take compliance seriously, which is particularly irritating and frustrating for those who do.
Tightening or increasing regulation on agents is definitely not the way forward. The idea of imposing further obligations on agents is in my view ridiculous and the organisations that are doing it have other agendas!
One such idea is requiring selling agents to conduct customer due diligence checks on buyers. It is a topical subject at the moment and I will address the misunderstanding that exists over this in my next article.
The real question should be how can we improve compliance under the current regulations?
For me it comes down to enforcement. There is a real lack of it. The chance of a high street agent having an HMRC inspection is at best minimal. So what are the chances of an online agent being visited?
Some agents will therefore take the view that the risks are worth taking and so diligence in compliance will not be a priority. As a result, some of the diligent agents can take the ‘why should I bother?’ view point.
How do you solve it? Not by increasing burdens on agents.
Diligent agents will make efforts to comply with new regimes and risk takers will continue to be risk takers, thus widening the gulf between those who comply and those who don’t.
The answer therefore must be to encourage, push and support HMRC into stepping up enforcement.
There are roughly 8,500 anti-money laundering registered agents. The income from this, together with the income generated by penalties against non-compliance, should be invested into national enforcement – compliance improvements will naturally follow.
(This article is the first in a five-part series on money laundering, the second instalment focuses on money laundering obligations and who they apply to.)
*David Beaumont is a director of Compliance Matters and the recently launched Property Professionals Support Centre
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"Tightening or increasing regulation on agents is definitely not the way forward. The idea of imposing further obligations on agents is in my view ridiculous and the organisations that are doing it have other agendas!" -
I believe, the synchronous assault on international property investors and brokers worldwide, allegedly spurred by national security concerns, seems to be nothing but a disguised attempt to attack geopolitical competitors.
Is it a coincidence that on January 13, 2016 the U.S. FinCEN issues so-called Geographic Targeting Orders (GTO) that require reporting by title insurance companies and their subsidiaries and agents on certain high-value real estate transactions starting on March 1, 2016?
With the growing authority and voluntarism exercised by the government authorities (especially in the US), foreign investors may find themselves in crosshairs all of a sudden. As a result, international property brokers as well as their local partners will be extra cautious not to get involved in “high-risk” deal-making implicating "national security issues" and "money laundering", particularly given the Western governments' willingness to self-initiate reviews of transactions based on "proximity" to national security concerns.
The crackdown on "dirty" property deals by the US FinCEN "comes too late to catch the mysterious buyer of a $47 million mansion in Miami-Dade County, registered under Boca Breeze, a Delaware shell company.", Leigh Stewart says, which arouses further suspicions as the the Feds' real agenda. https://tranio.com/usa/news/sayonara_shell_companies_us_cracks_down_on_dirty_money_property_sales_5027/
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