The property market has long been a target for criminal activity and money laundering. With 5,618 new estate agency businesses founded in 2021, this is more important than ever. At John Bray we are regulated as an estate agency and follow strict compliance with regards to all our property transactions, whether rental or sale. Our compliance officer Paul Offley at the Guild of Property Professionals today commented: “With regard to financial restrictions, things are moving very quickly, so agents need to apply more frequent on-going monitoring to make sure they are following the correct procedures with the most recent information. If they haven’t already done so in the wake of the current events, agents should be reviewing their initial risk assessment."
With attention being drawn to business investments and overseas property owners, we wanted to clarify exactly what money laundering and anti-money laundering are.
What is Money laundering?
Money laundering is how criminals change money and other assets into clean money or assets that have no obvious link to their criminal activities.
How does this work in the property sector?
- Buying a property using the proceeds of crime and selling or letting it.
- Hiding behind complex company structures and bank accounts.
- Mortgage fraud.
What is Anti-Money Laundering?
Anti-money laundering or AML as it is commonly abbreviated, refers to all policies and pieces of legislation that force financial institutions to monitor their clients to prevent money laundering. AML laws require that financial institutions report any financial crime they detect to relevant regulators. As a result, and as a compliant estate agency, we are obliged to complete customer due diligence and ensure our customers are being correctly identified.
What has changed?
According to the UK Financial Intelligence Unit Suspicious Activity Reports Annual Report 2020, £172m was denied to suspected criminals because of DAML Defence Against Money Laundering) requests, with a year-on-year increase in cases submitted. As a result of recent circumstances and following the commitments announced by the Prime Minister last week, the government has brought forward the Economic Crime (Transparency and Enforcement) Bill in light of Russia’s invasion of Ukraine. The new legislation will help the National Crime Agency prevent foreign owners from laundering their money in UK property and ensure they can be handed an Unexplained Wealth Order (UWO).
Which businesses should be registered?
The regulations apply to several different business sectors, including accountants, financial service businesses, estate agents and solicitors. You do not need to register with HMRC if you’re already supervised by the FCA or a professional body. If you would like to find out if a business, including your agent has been registered with HMRC under the Money Laundering Regulations, then you can check on the Government’s Supervised Business Register here:
What do I do if I suspect a business is not registered?
You can use the fraud hotline form if you suspect a business is not registered when it should be:
It is as important to know your estate agent is doing the right thing for you not only from a marketing perspective, but also from a compliance perspective.