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Be aware of Money Laundering Regulations

The Money Laundering Regulations of 2007 aim to detect, deter and disrupt financial crime and terrorist financing, by reducing the possibility of legitimate businesses being used for money laundering.

Certain categories of business are required to register with HM Revenue and Customs (or HMRC), who will then supervise these businesses to ensure that they are meeting their legal obligations regarding money laundering. From January 2010, estate agents and property auctioneers fell into this category of business

Working in estate agency, the personal responsibilities of you and your team are to know and understand the law, to know who your Money Laundering Officer (MLRO) is, and to report any activities that you or anyone else might have suspected to be suspicious.

HMRC are once again making spot checks on agents around the country to ensure that they are complying with the law. If an agent fails such an audit, then the financial fines can be quite significant, and then there is the potential subsequent PR damage to the brand.

There is a vie
w that Fine & Country would be a potentially high profile infringement, especially after the recent Channel 4 documentary on supposed overseas high net worth individuals looking to buy in central London. Therefore we need to be confident that every UK licensee is acting with professionalism and diligence.

There are five immediate steps that each Licensee should ensure are currently in place:

• Check that
your business is registered with HMRC

• You have appoin
ted a suitable Money Laundering Officer (MLRO), and also a deputy for each office.

• You have produced a written risk based compliance policy, kept available in a place where it can accessed and viewed if required

• Suitable records are kept for all clients and transactions

• Appropriate training is undertaken such that all client facing members of the team have a good understanding of the law and their responsibilities.

Our recommendation would be create a physical, central file to include the following documents:

1. A summary of the company’s MLRO, the local deputy, and the names of the staff members

2. A copy of the agent’s risk-based compliance policy

3. Copies of the training certificates for the relevant staff

Your team will need to know how to check the identity of any new clients, whether vendors or purchasers. An ID photo is required, such as driving licence or a passport, plus a property utility bill or bank statement linking that person to their specified address within the current two months. The agent must then create a file on the client that must then be kept for 5 years.

You must also ensure that your colleagues are discreet at all times. It is a criminal offence to inform or to tip off in any way, anyone that has been reported to the National Crime Agency (or NCA for short). It is also important that you are not naïve. It is a further offence not to report activities that you or anyone else might have suspected to be suspicious.

You can use external companies such as Tracewise or ETSOS to help validate any ID checks, but they cannot replace your own diligence and the overall responsibility will still remain with you.

The law states that you are responsible for checking your clients, normally the vendor. However, it may be foolhardy to not also demonstrate and apply similar vigilance over a suspicious applicant, whom your team might reasonably suspect may be using laundered or stolen money.

If you have any doubt about the level of compliance within your business, then we suggest that you seek professional advice as a matter of priority.

More information is available here.

Categories: General