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Implementing your risk assessment

11 March 2019 3189 Views
Implementing your risk assessment

The Money Laundering Regulations require estate agents to risk assess their business relationships and apply an appropriate level of investigation to ensure that they understand who their customer is, and why they are involved in the transaction.

In its guidance ‘Anti Money Laundering Supervision: Estate Agency Businesses’ HMRC outline agents should have a process in place to

assess the risks that your business may be used for money laundering or terrorist financing, and put in place appropriate measures to manage and lessen those risks. (3.1)

In our final blog, Director of Agency Services, Ben Robinson, considers how to put together your risk assessment and what steps you can put in place to ensure you comply with the Money Laundering Regulations 2017.

  1. Implementing your risk assessment

It might be useful to think about your risk assessment in similar terms to your Health & Safety compliance.

You assess a risk to your business, consider ways to mitigate the likelihood of that risk happening, and put appropriate measures in place to protect your business.

When it comes to money laundering risk HMRC are clear. You should have a process in place to

assess the risks that your business may be used for money laundering or terrorist financing, and put in place appropriate measures to manage and lessen those risks. (3.1)

In your risk assessment you will need to consider how your own risk could be affected by

  • where you operate: high value transactions/ area of high 2nd home ownership etc.

  • your clientele: cash buyers/ foreign investors/ companies or trusts/ politically exposed persons (PEPs) etc.

  • how you win new business: taking instructions from 3rd parties/ remote clients etc.

  • your stock: repossessions/ lettings portfolios/ relocation etc.

  • the transaction itself: private banking/ anonymity/ unusually low value for property type

It is important to keep in mind at all times the ultimate objective; identifying whether this transaction (and your business) is being used to legitimise illegally obtained funds.

The assessment itself needs to be reasonably simple and all staff must understand how to use it.

Your assessment should outline the steps your business takes to identify the risk status/score of an individual and/or transaction; and what the process is to complete verification in order for the transaction to proceed.

Importantly, where a high risk is identified

You must do more to verify identity and scrutinise the background and nature of the transactions than for standard customer due diligence. How this goes beyond standard due diligence must be made clear in your risk assessment and procedures. (4.20)

For more information about applying Customer Due Diligence for low risk transactions, and Enhanced Due Diligence for high risk transactions, sign up to our 3 part series “Is a passport enough for AML?”

https://mailchi.mp/landmark/is-a-passport-enough-for-aml

Missed our previous blogs. Read the m here

For more information about how implement your risk assessment

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