Money laundering is a serious issue that affects many industries, including the property sector.
It may be daunting, but it is important that estate and letting agents, as well as landlords, understand the importance of knowing what to look out for.
Specifically in the property sector, money laundering is described by the Government to often involve:
- the purchase of a property asset with the proceeds of a crime, then letting it or selling it on, providing the criminal with an apparently legitimate source of funds
- criminals hiding behind multiple bank accounts, in order to disguise the actual reason for a transaction and hiding its beneficial ownership
- paying an estate agency business a large amount, to then reclaim it later
- using funds to purchase a property that have been obtained as a result of mortgage fraud
Landlords must be aware of this information, when it comes to the buying and selling of properties. Being involved in a transaction with money launderers can end up costing a lot of time and money.
The following are examples of what estate agents are expected to do, in order to help prevent money laundering in the sector, according to the Government’s Estate Agency Guidance for Money Laundering Supervision document:
Reporting suspicious activity
- It is vital that agents report any suspicious activity. This should either be to your nominated officer or directly to HMRC, in the form of a Suspicious Activity Report (SAR)
- The Proceeds of Crime Act states that it is also an offence to tip off any person that you’ve made a report about
Managers should make sure that all relevant staff members are aware of the risks of money laundering, along with their obligations as agents.
They should make sure that staff receive training at regular intervals, and keep a written record of the training and support provided to raise awareness around money laundering.
Customer due diligence
This essentially means ensuring that the required steps are taken to identify customers and check that they are in fact who they say they are. This should be done when:
- a business relationship between a seller and a buyer is established
- an occasional transaction with a customer is carried out
- there is suspicion that there may be money laundering taking place
- there is suspicion that false information may have been supplied by the seller or buyer
Agents must also retain records of customer due diligence checks and any supporting information. These must be kept for 5 years after the end of the business relationship.
For full coverage on what is expected from estate and letting agents, in regards to the prevention of money laundering, take a look at the Estate agency guidance for money laundering supervision document on the GOV.UK website.