For the majority of people, a home will be the most costly purchase they ever make. As a result, when in search of a real estate agent to guide them in finding and purchasing the perfect house, people tend to approach this decision with careful consideration and selectivity.

If you operate your own estate agency, it is crucial to establish a strong reputation in your industry. Avoiding negative publicity is essential, particularly if your business is discovered to have played a role, whether knowingly or unknowingly, in facilitating money laundering.

What is money laundering?

Unfortunately, many people who obtain money illegally could be drawn to spending it on property — since, in doing so, they would be able to ‘clean’ the funds and make it harder for law enforcement to detect that this money was derived from criminal activity.  This is otherwise known as money laundering. 

In short, money laundering refers to the illegal process of transforming illicit funds into ‘clean’ or legitimate money, concealing how it was originally sourced. One common method in which criminals do this is by investing in real estate properties. 

This risk is why UK law requires estate agencies to do everything they can to prevent money laundering. Your duties would include undertaking anti-money laundering (AML) checks.

What AML duties does the law place on estate agents?

Your first point of reference should be the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 — otherwise known as MLR 2017 or simply ‘the Money Laundering Regulations’.

This piece of legislation demands that you, as the owner of an estate agency business, register with HM Revenue & Customs (HMRC) if your company undertakes any work classed as ‘estate agent activity’ under section 1 of the Estate Agents Act 1979 and you act: 

• On instructions from a customer seeking to purchase, sell or let an interest in land (either in the UK or abroad)
• To introduce a customer to a third party keen on buying, selling or letting an interest in land
• After such an introduction to ensure that the interest is sold or purchased 

You might be wondering what exactly would be considered ‘estate agent activity’ in this context. Many activities are included in this category, including: 

• Sending out details of properties and arranging viewings 
• Answering questions from people seeking to sell, buy or rent properties 
• Providing an energy performance certificate (EPC)
• Giving customers a ‘for sale’ board showing the estate agency company’s contact details

As for the types of estate agency businesses that must register, these include high street residential estate agents, commercial estate agencies and online estate agencies as well as:

• Land agents
• Property or land auctioneers 
• Relocation agents 
• Social housing associations offering estate agency services 

 

However, there remain specific circumstances where you would not need to register. For example, if the company is already regulated by the Financial Conduct Authority (FCA) for another purpose, the FCA might be able to supervise your company’s AML efforts as well.

If you fail to register an estate agency business with HMRC when you are legally required to do so, you may be hit with a penalty.

What grounds do your AML checks need to cover?

Before you start providing estate agency services to a customer, you need to establish that they are who they say they are. You should also monitor the customer during their relationship with you to watch out for any changes in the money laundering risk they pose.

Now, here is the good news: we have one of the UK’s leading electronic AML verification systems. Our own system has been built to ensure that users can quickly and easily complete AML checks fully compliant with the Money Laundering Regulations.

With these checks, you can instantly verify the customer’s identity and see whether the customer is currently subject to sanctions, a county court judgement search or an NCOA fraud search. This is a key challenge that real estate agents face, as performing enhanced due diligence is often more difficult than it seems in the real estate industry.

Nonetheless, our AML technology provides real estate agents with the tools that they need to efficiently and effectively counter money laundering activities, which may have otherwise been challenging to do without the right resources and technology. 

Estate agents are not accountants, and they are unlikely to be able to evaluate financial information like an accountant would, which is why our AML technology proves especially beneficial when efficiently assessing paper documents that are susceptible to forgery, such as utility bills. Manual inspection is no longer necessary.

Get quick but accurate results

Assisting customers in streamlining the property-buying process would be advantageous, given that the average length of time to sell a home has recently hit a 10-year high.

However, it's crucial to bear in mind that failing to adhere to the Money Laundering Regulations could expose you to imprisonment or substantial fines. Fortunately, with Creditserve, you don't have to compromise on reliability when conducting your AML checks.