Estate agency AML non-compliance trend continues
HM Revenue & Customs (HMRC) recently fined 30 estate agencies and property firms for breaches of anti-money laundering (AML) regulations. Several firms were levied with heavy penalties including a £52,000 fine for Bond Wolfe Auctions and Lloyds Property Group £15,000.
The property industry dominated this latest list of 79 companies penalised and made up almost half of all of the penalty notices published. The total amount imposed was over £300,000.
This latest instance of estate agencies and property firms being hit with fines for non-compliance comes as no surprise given that research earlier this year revealed that just 16,730 UK estate agency branches out of 22,270 across the country have registered with HMRC, the AML supervisor for the sector. Some 5,540 branches, or 25%, have yet to register.
What’s more, a recent poll found a “frightening” two thirds of estate agents are unaware of their AML reporting obligations. Analysis in March also showed that the estate agency industry’s compliance with the regulations is the second worst of all sectors within the UK.
Of the 30 firms recently fined, 12 had been contacted by Credas, provider of digital identity and anti-money laundering verification. They opted against engaging the firm.
Tim Barnett, CEO of Credas, said:
“AML is a responsibility that the property industry has to face whether we like it or not. Unfortunately, this burden will only get heavier still as the Government delegates this process to agents and lawyers.
The fines being regularly levied are becoming significant and those seen here in the latest round of penalties have topped £50,000 yet many have been higher previously, much higher, because they are levied on a percentage of the company’s revenue.
Agents simply want to get on with the business of selling and letting houses and so it’s understandable that compliance can sometimes be seen as a side-thought. Yet there are technology solutions that are easy to implement and cheap to use now and which help avoid vulnerability to big fines and bad PR.
To think, the cost ‘saving’ that some of the transgressors thought they had made by not spending a small amount on a digital AML process will have been tiny compared to the ultimate fine that has now been imposed upon them.”
Law firms have also fallen foul the regulations over the last year. In July, seven firms were fined £800 by the SRA and ordered to pay costs of £600. In a more striking case of non-compliance, high-profile London firm Mishcon de Reya was ordered to pay £232,500 in January following several breaches of AML rules.