Money Laundering Regulations – embrace, panic, avoid?
In this short article, I give some background and information about one of the seemingly myriad of new or updated regulations and suggest that agents wake up to their responsibilities and obligations before they find themselves in potential hot water.
Money Laundering Regulations have been around since 2007 but have risen to the top of estate agents agendas in recent weeks since HMRC who now police the regulations (having taken over from the former Office of Fair Trading) dished out some substantial fines to estate agents (one company was fined nearly £147,000) for non compliance.
Money Laundering Regulations are basically there to help identify and catch people who may be involved in the proceeds of crime, terrorism or tax evasion and who may be using the property market as a means of turning “dirty money” into “clean money” hence the term “laundering”.
The Regulations which, like so many, don’t actually apply to letting agents (although good practice says that a letting agent should take the same precautions as sales agents) as lettings agents are not estate agents under the definition in section one of the Estate Agents Act 1979 and so often seem to “slip through the net” of regulation.
We still have the ludicrous situation that an individual could be banned under the Estate Agents Act in the morning for some heinous crime, yet start up again as a letting agent in the afternoon. A clear nonsense.
Money Laundering Regulations require an agent to put in place and action six key things.
* Register each branch office with HMRC for money laundering compliance
* Have a written money laundering policy statement
* Have systems and procedures to verify the identity of all clients
* Appoint a Money laundering Reporting Officer through whom any suspicious activity is reported to the National Crime Agency
* Train staff
* Keep records
Verifying client identity can be done manually with paper documents or is more likely, in the future, to be done online
Embracing the regulations will make your business more professional, ensure good business practice and is likely to reduce issues that arise during transactions.
Panicking over the regulations is unnecessary as you can seek help and guidance and, through good systems and training, ensure that your business is both operating compliantly and diligently for the benefit of all.
Avoiding the regulations or “turning a blind eye” is simply not an option unless you are prepared to face heavy fines, a potential jail term and the terrible adverse PR that would result.
Naturally, I should be pleased to discuss how your business can best comply with these regulations.