X
etsos

Free trial Sign-up

Please leave your name and email and we'll be in contact shortly.

Name

Company

Contact Number

Email

Please complete the sum:        
43 + 1 =

Blog 2: What are HMRC Looking for?

25th January 2019

The Money Laundering Regulations require estate agents to risk assess their business relationships and apply an appropriate level of investigation to ensure that they understand who their customer is, and why they are involved in the transaction.

In its guidance ‘Anti Money Laundering Supervision: Estate Agency Businesses’ HMRC outline agents should have a process in place to

assess the risks that your business may be used for money laundering or terrorist financing, and put in place appropriate measures to manage and lessen those risks. (3.1)

In our second blog, Director of Agency Services, Ben Robinson, considers how agents could be identifying money laundering risk in their business.

What are HMRC looking for?

Money launderers come in all shapes and sizes. It’s easy to think this a London-centric issue and primarily because of foreign investment but the reality is money laundering happens everywhere.

The challenge is identifying the red flags and risk.

These red flags are fluid depending on your own business and circumstances. Ultimately the Money Laundering Regulations 2017 require estate agents understand who their customer is, and why they are involved in the transaction.

Although in most cases this will be reasonably self-evident, you are required to have process in place for assessing whether the individual and/or transaction is being carried out for the purposes of money laundering. This Risk Assessment should be completed on every transaction.

This process informs the level of due diligence you undertake to verify the individual and/or transaction. HMRC talk about taking a “risk-based approach”… in other words, where there is a low risk you conduct a thorough but lesser level of investigation than a high risk check, where you would be required to demonstrate that you applied greater scrutiny before proceeding.

To help identify where an individual and/or transaction could pose a risk we’ve produced a brief outline of indicative red flags. These are not hard and fast rules, rather transactions that display any of the characteristics outlined below may be considered to medium or high risk.

Business Source

  • Unusual introducer
  • Direct approach where reason for contact questionable
  • Proximity of the party to estate agent and/or their legal representation – if there is a distance, why?

Seller Characteristics

  • Absent owner or landlord
  • Owner/seller living abroad
  • Recently issued (new) ID documents/driving licence etc
  • Seller’s lack of knowledge about the property
  • Where the seller lives at a different address from the property and has no documentary evidence such as bills or buildings insurance schedule linking seller to the property
  • Proximity of a signatory to the witness – if there is a distance, why? What is the relationship between the signatory and the witness?
  • Email contact (remote client)
  • Sole proprietor
  • Long-time owners (high equity)
  • Use of intermediaries to conduct the transaction
  • Difficulty in identifying beneficial owners through complicated legal entities

Buyer Characteristics

  • Buyers you do not meet or are reluctant to meet
  • Difficulty in conducting Customer or Enhanced Due Diligence
  • Foreign investors/ buyers living abroad
  • Property has not been inspected prior to purchase
  • Value of the purchase is apparently beyond their means, with no satisfactory explanation of source of funds
  • Proximity from estate agent and/or legal representation – if there is a distance, why?
  • Use of intermediaries to conduct the transaction
  • Where you have an existing relationship, the transaction is different from the normal business of the customer

Property Characteristics

  • Empty
  • Tenanted
  • Unencumbered (no mortgage)
  • High value
  • Unregistered
  • Where there is no restriction on the register to comply with

Other Characteristics

  • Quick sale required
  • Quick, back to back sale (increased price)
  • Funds going abroad or to an unusual destination
  • End of chain transaction
  • Value of property is unusually low without a good/plausible and verified reason

In our final blog we’ll consider how to put together your risk assessment and what steps you can put in place to ensure you comply with the Money Laundering Regulations 2017.

For more information about how to understand the risks posed by money laundering

 

Find out more

 

Verification

The client and experts view...

  • thumb1
Latest newsspeech Bubble

1/2 Day AML/CPR Courses for Estate Agents

Helping you stay the right side of regulation

Landmark and Michael Stephen Day of Integra Property Services host a 1/2 day training course on 27th & 28th March in Manchester and Milton Keynes. Landmark are offering an 18% discount on the standard course fee. CLICK HERE to book your ticket(s). (more…)

Blog 3: Implementing your risk assessment

The Money Laundering Regulations require estate agents to risk assess their business relationships and apply an appropriate level of investigation to ensure that they understand who their customer is, and why they are involved in the transaction. (more…)

Blog 2: What are HMRC Looking for?

The Money Laundering Regulations require estate agents to risk assess their business relationships and apply an appropriate level of investigation to ensure that they understand who their customer is, and why they are involved in the transaction. (more…)

Blog 1: What is the risk?

The Money Laundering Regulations require estate agents to risk assess their business relationships and apply an appropriate level of investigation to ensure that they understand who their customer is, and why they are involved in the transaction. (more…)

Case Study: Noise issue could cost agent £9000

Our latest case study come from a recent news item to have hit the industry and national press.

A disgruntled tenant is claiming £9,000 in damages from an agent and landlord who, in his litigation, he claims rented him a flat with an excessive noise issue. (more…)

divider
newsletter sign-up

Sign up for our e-newsletter

Name
Company
Email Address
trialTop

trial sign-up

Click the Apply button opposite to use our software on a trial basis...

trialBottom
  • etsosnews

  • etsosnews

  • Linkedin Twitter Facebook
    This site uses cookies. Find out more about this site’s cookies.