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Make anti-money laundering and digital compliance easy - over 1,000 property firms benefit from our award-winning solutions. As a government-certified IDSP, which is certified against the DIATF (Digital Identity & Attributes Framework), you can onboard customers quickly and securely with the latest biometric and OCR technology. Perform KYC checks in less than 2 seconds and benefit from the highest match and pass rate on the market (97%).
Selling and buying property is an ideal cover for criminals attempting to “wash” illicit funds, so property firms are often targeted, with *1 in 16 firms falling victim to financial crime. Since *2016, £6.7 billion of suspicious funds have been invested in UK property, showing this sector is especially vulnerable to money laundering.
SmartSearch offers an efficient end-to-end AML solution. With our unique electronic platform, you can verify both individuals and businesses, and perform screenings for sanctions and PEPs, at the touch of a button. You can even access all these services while you’re out on a viewing, with our fully integrated app, so AML for estate agents has never been more convenient.
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AML regulations are consistently updating to reflect the changing tactics of those who perpetrate financial crime – keeping on top of regulatory requirements can be both tricky and time-consuming.
The SmartSearch system evolves right alongside regulations from the FATF and the FCA. We adapt our technology and product offerings to ensure there are never any gaps in compliance for estate agents and property firms.
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Did you know that over the past five years, the number of attempted property frauds has increased by 84%? HM Land Registry recorded 46 cases of attempted property fraud in 2021/22, a sizeable jump from the 25 cases of attempted property fraud recorded in 2017/18.
Such stark statistics underline the vulnerability of the property industry to all manner of forms of criminal activity. That, in turn, demonstrates the need for the optimisation of estate agents’ AML arrangements.
We take such risks extremely seriously at SmartSearch. It is why we offer an all-encompassing customer identity authentication solution, drawing upon cutting-edge technologies to automatise AML checks.
Many estate agency businesses are aware of their AML compliance obligations, but they also often dread time-consuming and costly manual checks. They will therefore likely appreciate the opportunity to leverage a global database of a detailed corporate entity, individual credit, and legal record information. Such a solution will enable them to eliminate manual processes and significantly reduce the time taken to conduct AML checks and generate reports.
With SmartSearch, it can all be done with a click of a button.
Entrusting SmartSearch with your property business’s AML & compliance processes also means having access to the only KYC platform that provides ongoing monitoring and centralised control. In addition, our platform offers facial recognition and liveness technology for enhanced security when working remotely.
Interested in learning more about how the SmartSearch platform could greatly optimise and automate your estate agent’s AML processes? If so, simply contact us now to request a demo. Discuss your business’s needs with our team today, and we will be pleased to put together your bespoke compliance solutions.
As an estate agency business in the UK, you are obliged to undertake AML checks and customer due diligence in accordance with the Money Laundering Regulations 2017. This is due to the high risk of criminal activity that a property transaction can represent.
Failing to comply with the UK’s AML provisions can result in your property business being hit with fines of between a few hundred pounds and millions of pounds, depending on the severity of the criminal offence. One property business in 2018, for example, was hit with a £215,000 fine for failing to properly implement the AML regulations.
Depending on the specifics of your case, non-compliance could even result in you being suspended from practising. HMRC also frequently heavily publicises the names of businesses that do not comply, so your estate agency business could be risking serious reputational damage, too.
It is clearly crucial, then, for your property business to both register for and comply with the Money Laundering Regulations 2017 and its subsequent updates.
There is a need for AML for estate agents to become more sophisticated as the threat landscape evolves – but too many firms in the property industry are still not fully aware of those risks.
Our own recent survey of 500 regulated businesses across the UK recently discovered that two-thirds of such firms wrongly believe hard-copy documents – such as passports and utility bills – are enough to provide reassurance that a customer is genuine. This was despite more than 83% of respondents being aware of digital systems for electronic verification (EV).
So, what are the key AML property obligations for businesses like yours? Below, we have set out AML checks that must be undertaken every time someone sells a property, in order to ensure legal compliance for estate agents.
Every estate agency business in the UK is legally required to be registered with HMRC for money laundering supervision. Estate agencies that fail to register can be hit with fines.
According to a January 2022 report, a quarter of estate agents in the UK had not yet registered with HMRC for the purposes of complying with AML rules, some four years after the law required them to comply. This meant that thousands of estate agents were committing a criminal offence by failing to register themselves with the department.
Such contravention of the law could lead to significant fines for your property business, depending on the number of branches your organisation has. These fines are typically around £5,000 to £6,000 even for smaller estate agents that fail to register for AML purposes.
For any property transaction, there is a need to seek proof that the person selling the property is the genuine owner. You can check this by looking at the property’s title deeds via the Land Registry. The title deeds will show the names of the current owners, which estate agencies are required to cross-reference against the seller’s IDs and a recent utility bill.
There has been a legal requirement since 1990 for all residential properties in England and Wales to be registered on the Land Registry Portal. So, it is likely that any given property is registered already.
In the event that a particular property your client is looking to sell is not registered, the owner will need to find the property’s original deeds, which might still be with their mortgage provider or solicitors who handled their property transaction previously.
If the property owners are still unable to find the deeds, they will need to apply to the Land Registry for a Title Absolute. This can be a time-consuming process, so estate agencies should be proactive in determining at an early stage whether this will be needed for a given property transaction. That, in turn, will enable the owners of the property to apply as soon as possible.
Another key part of estate agents’ AML obligations is ensuring that a prospective property buyer has obtained the money for their purchase from a legitimate source.
So, for every property transaction you handle, you will need to obtain evidence of where the buyer’s funds have come from. If, for example, the buyer claims they have earned the money from regular income as an employee, you should be able to verify this against bank statements.
As an estate agent, you are also required to take the appropriate steps to verify the identity of your clients. You can do this by – among other measures – requesting and obtaining a form of official ID, such as a passport or driving licence, to prove the individual’s name. A recent utility bill, meanwhile, will show the client’s postal address.
After collecting these documents, you are required to record and keep them on file for five years.
Once your estate agency business has verified the client’s identity, you will need to assess the risk – if any – of entering into a business relationship with them.
This will necessitate you screening the individual’s details against sanctions and global watchlists, in addition to carrying out PEP (Politically Exposed Person), SIP (Special Interest Person), RCA (Relatives and Close Associates) and adverse media screening on them.
As critical as these checks are for the purposes of AML & compliance, they can also be onerous and time-consuming for many estate agencies. So, don’t hesitate to choose SmartSearch to streamline all of these tasks into a single easy-to-use platform.
There have been increasing concerns in recent years about properties becoming prime targets for the laundering of illicit funds. The statistics sadly tell their own story; according to research from Transparency International, suspicious wealth has been used to acquire more than 500 properties in the UK, with a collective worth of more than £5 billion.
In December 2020, the UK Government released a report – entitled National risk assessment of money laundering and terrorist financing 2020 – which noted that “corrupt foreign elites continue to be attracted to the UK property market… to disguise their corruption proceeds.”
The report, put together by the UK Treasury and the Home Office, observed that the high amounts of money that were able to be moved in a single property transaction, as well as the appreciation in value and the lifestyle benefits that such properties offered, helped to make them “very attractive to criminals.”
It seems that the importance of stringent AML property measures is continuing to increase. Although the National Crime Agency (NCA) has said that as recently as the 2018-19 financial year, the UK property industry accounted for less than 1% of suspicious activity reports, there are fears that this percentage could rise.
Those fears are particularly acute because of the evidence that some parts of the UK property sector are not doing enough to guard against the risk of money laundering. The aforementioned National risk assessment report, for example, warned that half of estate agents advertising properties for sale at £5 million or over had failed to register with HMRC for anti-money laundering supervision in 2019, or had failed to pay their yearly fees for this service.
While estate agents have responded to the increasing risks by upgrading their risk scoring to medium, there is much more that needs to happen to mitigate against illegally gained money flooding into the UK property sector.
It is expected that national and international AML rules and regulations will continue to tighten in the years ahead. However, AML in property businesses can also be modernised with the use of technology to automate compliance and optimise the management of data.
As an estate agent, you might be mindful of meeting the regulatory requirements and guarding against risk, but you may also be interested in knowing more about how you can improve fraud prevention.
When your estate agency business is seeking to fulfil its obligations to prevent money laundering, you will need to be skilled in identifying unusual or suspicious risk patterns. Below, we have set out some of the categories of risk from an AML property perspective.
Although by “customer risk” we are referring to the prospective property buyer as the customer, this can naturally affect the seller, too. So, it is of critical importance to take steps to identify the real buyer of the property.
High-ranking foreign officials or Politically Exposed Persons (PEPs) will require particular scrutiny due to the international provisions – such as sanctions – that may apply to them.
This is a category of risk that the estate agent, seller, and buyer all have reason to be concerned about. If the location of the property, buyer, and seller are the same, this will make it easier for an estate agent to guard against the risk of criminal activity.
If, on the other hand, the geographical difference between the property and the prospective buyer seems inexplicably wide, this will need to be accounted for in AML processes. The risk is likely to be especially great if the buyer is based in a jurisdiction that is known for high levels of corruption, or where there is a lack of stringent AML & compliance requirements.
Factors such as the type of property, incompatibility between the buyer and the property, cash usage, and sequential transactions all have to be considered under the banner of transaction risk. In particular, estate agents should be alert to transactions that do not appear to be commercially meaningful or professional.
Estate agents must take a risk-based approach to help identify causes for concern, to reduce the likelihood of suspicious wealth being used in a property transaction they are overseeing. This must include performing customer due diligence measures that will help them determine the risk level posed by each and every client of their estate agency business. T
Yes – anti money laundering checks for estate agents and other property firms are required by law, as they’re included in the list of DNFBs which are considered susceptible to money laundering. This is because the buying and selling of property is a prime opportunity for financial crime, and the cash flow involved in these transactions is often exploited as a means of “washing” illegally obtained funds.
Estate agents and property firms should ask for proof of identity early on in the proceedings, whether the client is selling or buying a house. They are legally obliged to confirm the identity of clients is legitimate, as part of their KYC checks for AML compliance. This is in line with legal requirements from the FATF, and guidelines from the FCA.
Following guidance from the Property Ombudsman, Estate agents are legally obliged to ask for proof of funds, which includes confirming the monetary amount and checking that these funds have a legitimate source. This allows estate agents to confirm that the funds are not the proceeds of illicit financial activity, like money laundering.
There are various rules and regulations governing AML for estate agents in the UK, including the need to register with HMRC for money laundering supervision.
As an estate agent, you are also expected to carry out a range of AML checks for each property transaction that you handle. These include obtaining proof that the person selling a given property is the genuine owner, as well as seeking proof of your clients’ identities, and ensuring the prospective buyer’s funds have been obtained through legitimate means. You will also need to carry out PEP (Politically Exposed Person) and sanctions screening.
AML & compliance should be among your estate agency business’s uppermost priorities in its dealings with HMRC. The department sets out various rules and guidelines in relation to AML for estate agents.
Steps that your estate agency business should take to ensure the satisfaction of HMRC include, but are not necessarily restricted to:
Ensuring that you have a policy, controls, and procedures document in place
Appointing a nominated Officer, who will be responsible for handling all money laundering suspicions. Larger property businesses will also need to put in place a Deputy Nominated Officer
If your business has more than one branch, appointing a Compliance Officer to make sure the business takes the appropriate steps to achieve compliance
Training staff on the risks in relation to money laundering and terrorist financing
Identifying the existence of all property owners and any other beneficial owners in a given property transaction
Assessing the risk of money laundering involvement for all sellers, beneficial owners, and buyers
Ensuring that customer due diligence is completed on all customers and beneficial owners before your estate agency enters into a business relationship with them
Carrying out enhanced due diligence on individuals who are categorised as higher risk.
Failing to comply with the department’s AML regulations could result in civil penalties or even prosecution. Such punishments could include unlimited fines and prison sentences of up to two years. Estate agencies that do not comply with the regulations may be at risk of money laundering charges under the Proceeds of Crime Act 2002.
