Without AML, you’re nothing

A kind reader in Ireland has pointed out to me this recent case (I’m sure you’re all on top of it, but what with the dizzy promise of Easter eggs this weekend, it quite escaped my notice).  At the heart of it is a business transfer agent called RTA (Business Consultants) Limited, based in Stockport.  The details are given in the transcript, but in short, in February 2010 Peter Bracewell appointed RTA to sell his business property.  Partway through, Mr Bracewell changed his mind about the sale and tried to terminate his agreement with RTA.  They said that he still owed them their commission, and took him to court.  Unfortunately for RTA, someone spotted that RTA – despite acting in this case as an estate agent – had not registered with their supervisory authority (then the Office of Fair Trading for estate agents, now HM Revenue & Customs) on or before 1 January 2010.  RTA was alerted to its shortcoming by the OFT on 11 October 2012 and registered the very next day – but this was long after it had entered into its contract with Mr Bracewell.  The failure to register was (if we can use this term in the context of a legal tussle) an honest mistake.  As HHJ Richard Seymour QC observed: “I accept that, on the material put before me, the failure of RTA to comply with the requirement to register with OFT earlier than it did, did not indicate dishonesty or ‘turpitude’.  OFT plainly took the same view, as it did not seek to impose any civil penalty on RTA or to prosecute it.”

But sadly for RTA, the wording of the Money Laundering Regulations is such that a failure to register means that they were in effect prohibited from acting as estate agents: in essence, unless businesses are registered with their correct AML supervisory body, they “may not carry on the business or profession in question”, and indeed are committing a criminal offence if they do so.  And – stay with me, we’re nearly there – if they are carrying on their business or profession in contravention of the law, their commercial contacts are rendered illegal and unenforceable.  Long story short, for RTA and Mr Bracewell, “both the claims in this action and the claims in the counterclaim fail and are dismissed”.

So it seems that a failure to register for AML supervision is not simply an administrative oversight – its implications can be very wide-reaching indeed.

This entry was posted in AML, Legislation, Money laundering and tagged , , , , , , . Bookmark the permalink.

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