New Regulations (The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017) came into force on 26th June 2017.
- They continue to apply to estate agents as a regulated sector.
- However the general obligations, including to report suspicious activity and to not tip off any person that such a report has been made, that are imposed by the Proceeds of Crime Act 2002 apply to all businesses including letting agencies.
The supervisory body for estate agents is HMRC which has published an associated guidance document (Anti-Money Laundering Supervision: Estate Agency Businesses) for this industry.
In general the Regulations impose more requirements on estate agents than before. The main requirements are:
- Due diligence checks are now required on both parties to a transaction (so if you are acting for a seller you also need to make checks on the buyer)
- Checks on a buyer should be completed before an offer is accepted. An amendment has been made to the Estate Agents (Undesirable Practices Order) to facilitate this. This now means that it is permissible to delay putting forward an offer if the agent is unable to complete due diligence on the buyer. Greater checks are required on Politically Exposed Persons (PEP’s)
- Each business must carry out a risk assessment and then prepare, maintain and approve a written policy statement, controls and procedures to show how the business will manage the risks of money laundering and terrorist financing identified in that risk assessment. This must be kept up to date and provided to HMRC on demand.
- Owners and managers of estate agent businesses must receive approval from HMRC to carry on in that role, as must have nominated officers (see below)
- More complex businesses, effectively all businesses with two or more branches or more than three staff should have, in addition to a Nominated Officer (usually known as MLRO), a Compliance Officer (who ideally should not be the MLRO). Names of both those officers must be submitted to HMRC within fourteen days of appointment.
- The compliance officer will be responsible for undertaking regular audits on processes as well as staff screening.
One area where requirements have been made easier:
- It is possible to rely on due diligence checks made by certain other businesses, as long as they are regulated. So a sub-agent could rely on checks made by the main agent.
- You need to start undertaking due diligence checks on potential buyers now, if you don’t already. (Remember if you are acting for the buyer then you need to also do the checks on the seller).
- To make this easier you should consider letting applicants know at the earliest possible stage that if they want to make an offer you will need ID information. You may even consider adding a comment to this effect on your property details and in other prominent places such as your website).
- You will need to submit details to HMRC so that they can approve owners/managers. It seems that you have a year to do this.
- Appoint a compliance officer if you need one.
- Start to review your processes with a view to producing a written risk assessment.
- Review your staff training requirements