A quarter of UK estate agency branches have failed to register with HMRC for money laundering supervision, according to new analysis from the property and legal fintech Thirdfort.
Just 16,730 UK branches out of 22,270 across the country have registered with HMRC, the anti-money laundering supervisor for the sector. Some 5,540 branches, or 25%, have yet to register.
Since publication, the figures have fuelled concerns not just amongst agents, but across the legal and conveyancing community regarding the potential impact on firms and solicitors.
Brian Rogers, Regulatory Director, The Access Group (Legal Division), commented:
“This data just goes to show why many solicitors are hesitant to rely on estate agents for carrying out due diligence checks on their clients for money laundering purposes however, the real concern is where some agents put pressure on law firms to accept the due diligence checks they have carried out in order to allow transactions to move along more quickly; saying ‘no’ because of a lack of confidence in an agency’s processes could lead to the law firm losing a source of work, not many can afford to do this so take the risk of not getting caught!”
Money laundering costs the UK more than £100bn annually and has been highlighted as a growing risk in residential and commercial property since the Pandora Papers leak, earlier this year. A joint report from HM Treasury and the Home Office in 2020 assessed the risk of money laundering in the estate agency market as medium, up from low.
The report noted weaknesses in anti-money laundering and counter-terrorist financing controls, limiting the mitigations against the risk of money laundering in the sector. Common failings included a “lack of bespoke policies, controls and procedures aligned with an appropriate risk assessment of each firm’s clients”.
Olly Thornton-Berry, co-founder and Managing Director of Thirdfort, which combines Open Banking, data analytics, and the latest in biometric and cryptographic verification to meet AML obligations and automate ID checks said:
“Money laundering is a serious and growing risk in the property sector and HMRC is hot on the heels of those agents that fall foul of their regulatory obligations.
The failure to tackle money laundering has significant implications. Not only does it support criminal activity, but it leaves agents open to reputational damage, fines and even bans.”
Sam Ruback, Thirdfort’s Head of Legal, said:
“Our research shows there’s still a long way to go for property professionals in this area. Perhaps it shouldn’t come as a surprise, with levels of scrutiny like never before many businesses are still adapting to their new reality. This is true for agents, in particular, who are expected to navigate money-laundering regulations with limited guidance, particularly around the use of digital ID tools and their efficacy in combatting fraud.
The situation isn’t beneficial to anybody who’s part of a conveyancing transaction. On the brighter side, technology can play a huge part in alleviating the issue. Leading AML and KYC solutions that have been built in line with HMRC’s guidance can give both agents and conveyancers peace of mind that they are able to comply with requirements under regulations.”
2 Responses
Bunkum. Law firms have never, and never would rely on agency AML checks. What planet is this person on?
Those who can’t handle a message will always attack the messenger.
But not necessarily with Brookfield’s rudeness.
Can she please publish the basis for her unsupported statement “Law firms have never, and never would rely on agency AML checks” or leave it looking like a paid plant that she has been paid for?