Cutting corners on compliance opens pitfalls for estate agents
Estate agents that overlook the importance of compliance are not just risking anti-money laundering (AML) breaches, but also the financial and reputational costs that follow.
Despite the weight of compliance and regulatory demands, many individuals within the industry still cut corners on compliance, leaving their firms vulnerable.
Our own latest research revealed that more than two-thirds (67%) of the property industry are worried about unintentionally committing an anti-money laundering (AML) breach.
Even more alarming is that almost a third (27%) express significant anxiety regarding the effectiveness of their current compliance procedures. These statistics underscore the pressing need for estate agents to address supply chain compliance risks diligently.
Among the sectors surveyed, property emerged as the most concerned group when it comes to compliance regulations.
According to Transparency International UK since 2016, an estimated £6.7 billion of suspicious funds has been invested in UK property. This staggering figure emphasises the importance of vigilance within our industry.
What troubles me is that estate agents still rely on outdated manual processes to verify customers.”
However, what troubles me the most is that many estate agents still rely on outdated manual processes to verify customers. Astonishingly, our survey discovered that almost half (46%) of the industry manually verify new clients, mistakenly believing that copies of official documents like passports or driving licenses provide adequate reassurance.
I worry for the estate agents who depend solely on manual document verification and inadvertently leave themselves vulnerable to potential breaches. Criminals have become increasingly adept at forging official documents, making it easier to deceive firms that rely on these flawed methods. By neglecting to implement more robust verification techniques, estate agents expose themselves to the very risks they are concerned about.
It is crucial for the industry to adopt a digital compliance solution.”
It is crucial for the industry to adopt a digital compliance solution. We need to raise awareness about the dangers of relying on outdated compliance methods. The UK government’s recommendation, outlined in the 2020 Money Laundering and Terrorist Finance Act, underscores the significance of embracing digital compliance solutions.
By implementing these tools, estate agents can ensure comprehensive client identification and screening and take a stand in preventing the flow of ‘dirty money’ into the UK.
By leveraging cutting-edge technology, estate agents can streamline their compliance procedures, alleviating the burdensome weight of regulatory requirements.
Unintentionally breaking regulations is not an excuse. The time to act is now. By discarding outdated manual verification methods and embracing digital compliance solutions, firms can effectively address the risks of money laundering, safeguard their reputation, and contribute to upholding the integrity of the property industry.
Martin Cheek is Managing Director of SmartSearch