On 1 April 2014 HM Revenue & Customs (HMRC) took over from the Office of Fair Trading (OFT) as the regulator of residential and commercial estate agents for the purposes of anti-money laundering.
The final act of the OFT was to impose fines totalling £246,665 on three real-estate agents for "significant and widespread" anti-money laundering lapses:
- Hastings International UK Limited based in South London was fined £47,966
- Jackson Grundy based in Northampton was fined £169,652
- Jeffrey Ross of Cardiff was fined £29,000
These fines represent a significant increase from those previously imposed for these types of breaches. Indeed as recently as January 2013 Leicester based IPS Estate Agents was fined £11,844 for money laundering failures.
It is expected that the level of fines will continue to increase, even with the transition of regulator power to the HMRC, as regulator thinking is very much that only large deterrent fines will ensure that commercial organisations take their obligations seriously which in turn will shore up consumer confidence. We only have to look to the Financial Conduct Authority (FCA) to see the proliferation of large fines on both companies and key individuals.
It is therefore vital that residential and commercial estate agents take heed of these fines and ensure that they are compliant with the Money Laundering Regulations which make it compulsory for those businesses both to register with HMRC and implement anti money laundering controls or face action.
The type of procedures demanded by the regulations include:
- confirming a customer's identity before entering into a business relationship
- ongoing monitoring of a business relationship
- retention of records
- checks and controls to anticipate and prevent money laundering
- appointing a nominated officer or money laundering reporting officer (MLRO) and giving them proper resources to carry out that function
Failure to review procedures and policies at regular intervals once they are in place is a significant lapse under the regulations and likely to result in regulatory action. So too is the failure of a nominated officer or MLRO to make or review suspicious activity reports, identify trends and make appropriate recommendations.
Sanctions for breaching anti-money laundering regulations range from financial penalties to, in the most serious cases, criminal prosecution. Crucially, enforcement action does not require a business to actually be used by criminals, mere vulnerability is sufficient.
Shoosmiths have financial regulation compliance expertise in the anti-money laundering regime from compliance through to defending investigations and enforcement.
We can provide bespoke policies and procedures, advise on streamlining your business processes to minimise regulatory disruption, and train employees up to board level on the relevant legislation in an easily digestible format. We can also assist in nominated officer or MLRO reviews.