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Since the implementation of the 4th Money Laundering Directive many agents have started using electronic money laundering checks to conduct their Customer Due Diligence (CDD).

CDD forms part of estate agent’s efforts to identify what risk their clients pose from a money laundering point of view; a process also known as Know Your Client.

Electronic checks are one part of the estate agent’s AML armoury.

HMRC’s own guidance identifies other channels of enquiry to help them demonstrate anti-money laundering compliance. CLICK HERE to view HMRC’s guidance.

In each case, the agent’s risk assessment should outline how and when each of these tools should be used to supplement their enquiries. Find out more about how to produce your own risk assessment here.

 

Land Registry

The Land Registry holds the only definitive resource for the identification of property owners.

Where your risk assessment identifies it, agents can check information held by Land Registry to verify property ownership.

It may be appropriate in cases where ownership is unclear, or where there are suspicious circumstances such as a vacant property being sold by an absent landlord, as a result of a marital separation, or through a third party or company.

HMRC’s own guidance provides the following:

It is common for property to be owned by more than one person. You must identify any co-owners as these will be beneficial owners. The customer you are dealing with may be either an owner or is acting for the owners. You will need to carry out customer due diligence on the owners and any person acting on behalf of the owners. Ownership can be established through land registry and examining documents such as mortgage statements. (*4.60)

 

Company Checks

Where a sale or purchase is being conducted through a company it is necessary to identify and conduct CDD on all beneficial owners; all those with 25% or more of the shareholding.

Beneficial ownership information is now available on Companies House (beta.companieshouse.gov.uk) by searching under “People” and “Persons with significant control” also known as the PSC Register.

However, where there are complicated ownership structures, or if the business has subsidiaries you may need to do some digging to understand the shareholder statuses. Electronic checks are available and clearly outline the shareholder status of all owners enabling staff to ascertain beneficial ownership information quickly and accurately.

CLICK HERE to read our guide to identifying beneficial owners

 

Foreign National ID Checks

Agent’s compliance procedures will be dictated by their own risk assessment; and when it comes to foreign nationals it will likely make a differentiation between those resident in the UK and those resident abroad.

When it comes to foreign nationals HMRC require agents to

obtain the same types of identity documents for non UK residents as for UK residents. If you have concerns that an identity document might not be genuine, contact the relevant embassy or consulate or use the link to PRADO below. If documents are in a foreign language, you must satisfy yourself that they do in fact provide evidence of the seller or buyer’s identity. HMRC may require official translations when inspecting your customer due diligence records. (*4.48)

Where paper ID is sought, evidence must be provided that demonstrates efforts to verify the legitimacy of the documentation.

Electronic checks can verify the legitimacy of the documentation provided.

For more information about checking foreign national click here

 

Politically Exposed Persons

HMRC require estate agents to demonstrate a process to identify whether their client is a Politically Exposed Person (PEP).

With no central database of PEPs, HMRC have provided guidance on who might be considered to be a PEP,

Politically exposed persons are persons that are entrusted with prominent public functions, held in the UK or abroad (4.21)

but have not been very forthcoming with guidance on how to introduce a process for identifying PEPs; instead suggesting

Information is available in the public domain that will help you to identify politically exposed persons. You can make use of a number of sources, for example:

adding

You are not required to, but you may decide to use a commercial provider. (* 4.22)

Some agents have gone down the route of asking the question of their clients directly and requesting they self-certify their PEP status.

Electronic checks will identify whether the individual is a PEP risk and demonstrate a process for the agent’s AML policy.

 

Audit Trail

A mandatory part of estate agent’s compliance activity is the requirement to

have a system for keeping copies of customer due diligence and supporting records and to keep the information up to date (*4.1)

Whether it’s the filing cabinet in the corner or online storage agents must be able to produce evidence of their compliance activity. This becomes more challenging as the responsibility for conducting AML checks gets split between more people and offices. Compliance officers must conduct regular reviews of checks completed to ensure all staff are completing KYC appropriately.

This may involve senior staff travelling around to physically check branch compliance, potentially spending significant periods of time out of the office on non-revenue generating activities.

Some agents have gone down the route of centralising their processes, dedicating admin resource to conduct their AML compliance. Others use software which enables them to continue to conduct the checks at branch level, but gives the Compliance Officer and/or Money Laundering Reporting Officer (MLRO) oversight centrally.

In many cases, agents are using tools from different sources, such as Land Registry, paper documentation, electronic verification, online research etc, making collating the resulting data centrally challenging.

 

 

Landmark’s Compliance in a Box service delivers solutions for each of these challenges under one roof, with one central system for recording and audit purposes.

Through one pay-as-you-go account agents can access a range of compliance tools; electronic client verification including identifying PEP risk, Land Registry checks, Company Checks, and Foreign National ID checks.

Our Compliance Packs ensure you demonstrate and record your processes and procedures remain the right side of compliance, leaving you to focus on the business of selling houses.

Try Compliance in a Box today. No tie-ins or contracts. Contact Samantha Peacock (sam.peacock@landmark.co.uk) on 01524 220013 or sign up below.

Try Compliance in a Box today

 

Verification

The ETSOS quote and referral system is a free useful tool in keeping conveyancing work where it belongs: i.e. on the local high street! It is an essential way to prepare for the inevitable onslaught of Tesco law Gary Rycroft – Partner, Joseph A Jones & Co Solicitors

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