In the ancient tale of Dionysius and Damocles, Dionysius, a powerful and rich man, offers Damocles the chance to sit at his throne to experience what Dionysius himself experiences every day. For all its splendor the throne has the unfortunate characteristic of having a large sword hanging over it by a horse hair. Pragmatically, Damocles retreats and Dionysius resumes his kingly duties, which include power and riches, but also require good management his risks, including that horse hair, lest its burden fall upon his head.

Money laundering is an increasing risk for estate agents, accountants, and lawyers in the UK property market. In the macro picture, there is an increasing amount of wealth channeled into UK property bolstered by rising prices in the housing market. This is a juicy target for any would-be money launderers.

On the other hand, anti-money laundering regulations have only become applicable to the gatekeepers to the property market–primarily estate agents and solicitors–in the last decade. These entities are predominantly small and medium sized enterprises that conduct business in a forthright manner trying to help people into the homes that they want to live in. This is an industry that is still dominated by face-to-face chats, phone calls and many walks around the local neighborhood. However, it is these very enterprises that are now required to do anti-money laundering processes under the Money Laundering Regulations 2007. Essentially, processes that were once required really only in financial firms are now required of firms operating in the property market. The problem is that there is very little accumulated industry knowledge when it comes to anti-money laundering processes.

If these processes are done poorly, the penalties can be severe. UK estate agents were fined £246,665 in 2014 for “significant and widespread” failures in money laundering processes.These failures included:

  • Failures to apply adequate customer due diligence measures when carrying out estate agency work.
  • Failures to conduct ongoing monitoring of business relationships.
  • Failures to establish and maintain appropriate policies and procedures on adequate record keeping, internal controls or risk assessments.
  • Failures to train relevant employees in how to recognise and deal with transactions and other activities, which may be related to money laundering and terrorist financing.

Simple, preventable risks that did not need to increase business friction.

Regulation of the property sector is changing though. Formerly under OFT, from 2014 it is now regulated under HMRC. Under the new regulatory framework, according to the HMRC, “Senior managers are personally liable if they don’t do everything they need to do to protect their business from money laundering and terrorist financing.”

Companies in the UK property market need to take money laundering seriously. There are simply too many holes in the industry where dirty money can flow into and back out of the property market, and it is a matter of time before that horse hair snaps and the sword comes crashing down on the businesses of many in the property sector.

How can MatrixVision help? MatrixVision provides a full compliance management platform to reduce KYC friction for good customers, and for yourself, and reduce the risk of KYC misses.Tailored for Property Professionals and configured for your AML rules, it ensures that your staff and business processes do what they need to do.

Download a PDF detailing all you need to know here


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