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Failure to have appropriate policies and procedures in place could see directors go to jail

On 10 January, HM Revenue and Customs’ (HMRC) Money laundering and terrorist financing (amendment) regulations 2019 came into force. But are we, as a profession, fully engaged and adhering to them? Do we understand what the new requirements need from us? Can anyone, including HMRC themselves, give a definitive explanation of what must be done?

So far, the advice has been merely to read the regulations and follow them. Simple, definitely, but not the most helpful advice. Similar regulations have been in effect for several years, but in our experience, a very high number of commercial agencies still don’t have appropriate policies and procedures embedded in their everyday working practices.

In March 2019, HMRC announced that a number of large fines had been levied on residential estate agencies following surprise spot checks on 50 estate agents in a week. Countrywide Estate Agents received the largest fine – £215,000 – for failing to ensure that its money-laundering procedures and record-keeping were in line with regulations. And punishment isn’t limited to financial penalties: if a failure to have appropriate policies and procedures in place and adhered to is found to have enabled criminality, the business’s directors could receive a prison sentence.

Now is the time for companies to act to prevent this from happening. Drawing up policies and procedures to conform with money-laundering regulations can be daunting, but there are specialists who can help. Ensuring that the relevant Know Your Customer (KYC) checks – also known as Customer Due Diligence (CDD) checks – are completed on landlords, potential purchasers and tenants is a good starting point.

This involves not only making the appropriate ID checks, but also being able to confirm if an individual is able to purchase or rent property, and is not an internationally politically exposed person or on an international sanctions list. This is where it gets a little more difficult, as being commercial agents, you won’t have had the training that customs and border agents have had to spot a forged or tampered-with passport, let alone be able to quickly access international sanctions lists.

But one advantage of the influx of technology into the real estate industry is that you can now complete these checks with ease. You can find out simply and quickly if the ID you’re given is genuine and unaltered, whether someone has given their true identity, and whether or not they are politically exposed or appear on any international sanctions lists.

There are also specialists available to audit your practice to help you implement the proper policies, procedures and risk assessments to help protect your business.

Proplist is committed to improving accessibility to KYC/CDD checks, and we’ll issue updates from our sales and marketing director, Sam Empson, on how we can assist you going forward.

For more information, visit proplist.com or speak to a member of our team on +44 (0)121 726 7475. To read the full regulations on money laundering, visit legislation.gov.uk 

Richard Howells, CEO Proplist

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