Money Laundering

The Money Laundering Regulations (Money Laundering Terrorist Financing (Amendment) Regulations 2019) are intended to ensure that businesses at risk of being used for money laundering have controls in place to minimise the risk of this happening. 

For several years, it has been an offence to provide house purchase relocation services unless you are registered with HMRC, the authority responsible for anti-money laundering supervision.  The 2019 Regulations extended this requirement to relocation businesses which handle rental properties with a rent exceeding 10,000 Euros per month. The new rules came into force on 10th January 2020, with businesses given a deadline of 10th June 2021 to register with HMRC.

Full details of registration requirements are contained at www.gov.uk/guidance/registration-guide-for-estate-agency-businesses.  The cost of registration is currently £300 per annum.

AML rules require your business to put in place certain controls to prevent your business from being used for money laundering.  These controls include:

• assessing the risk of your business being used by criminals to launder money

• checking the identity of your clients
• checking the identity of ‘beneficial owners’ of corporate clients and partnerships
• reporting anything suspicious about your clients’ business activities
• making sure you have the necessary management control systems in place
• keeping all documents that relate to financial transactions, the identity of your customers, risk assessment and management procedures and processes
• making sure that your staff receive money laundering training.

HMRC is entitled to audit your AML processes.  An unsatisfactory audit may trigger a civil penalty or criminal prosecution, so this is not an area of compliance which you can afford to neglect.  You should be prepared to demonstrate your knowledge and processes in the following areas:

1. The types of practical circumstances in which your business could encounter criminals seeking to launder money;
2. Familiarity with HMRC’s Money Laundering Guidance (www.gov.uk/topic/business-tax/money-laundering-regulations) and also their specific guidance for estate agency businesses (www.gov.uk/government/publications/money-laundering-regulations-2007-supervision-of-estate-agency-businesses).
3. Your staff have received money laundering training;
4. You can describe:
   1. Your sources and volumes of business;
   2. Your client base in terms of UK/foreign and percentage of clients that you meet face to face
   3. Your “evidence of identity” checks and the specific evidence required for different categories (e.g. individuals, businesses, foreign companies, beneficial owners etc);
   4. Your monitoring of regular, ongoing clients;
5. You can describe examples of “suspicious activity” and have guidelines and procedures in place to report such activity;
6. You are aware of tax evasion helplines, HM Treasury alerts and consolidated sanctions list;
7. You maintain full and accurate records;
8. You carry out risk assessments and can identify where a higher risk of money laundering or terrorist activities could exist.

For further information from the HMRC website please click here