Getting in a state about agents

When it comes to AML, I’m an equal opportunities preacher: I’ll tell anyone what to do.  So I take my AML hectoring, sorry, training into all manner of places, from swanky banks to glitzy casinos.  But the two parts of the regulated sector that do not often seek my services are the lawyers (who, and I can understand this, like to be trained by other lawyers) and the estate agents.  The latter is more of a mystery to me, but some of it, I fear, is the result of confusion.

The Money Laundering Regulations 2007 (come on, you know you just love looking at them) confirm that the AML requirements apply to estate agents, and then further define the estate agent as “(a) a firm; or (b) sole practitioner, who, or whose employees, carry out estate agency work (within the meaning given by section 1 of the Estate Agents Act 1979(a) (estate agency work)), when in the course of carrying out such work”.  On we go.  The relevant clause of the Estate Agents Act 1979 says that estate agency work is “things done by any person in the course of a business… pursuant to instructions received from another person who wishes to dispose of or acquire an interest in land”.  So this knocks on the head a common misconception – that only estate agents representing buyers (those who are bringing them money) need to be concerned.  It says “dispose of or acquire” – both sides.

So it seems clear to me that estate agents are, as they say, caught by the legislation.  And of course that’s only the secondary legislation – those working as estate agents and for estate agency firms are, like every other adult in the UK, liable to prosecution under the Proceeds of Crime Act 2002 and its money laundering offences.  And given the recent “Panorama” programme about the attempted laundering of the proceeds of Russian PEP corruption through the London property market and the subsequent outcry, this might be more on the minds of estate agents than in the past…

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7 Responses to Getting in a state about agents

  1. I have received this very helpful comment from James Barclay of Galvan Research and Trading:

    I noted with interest that the Royal Institution of Chartered Surveyors (RCIS) has recently reminded their professional members of their legal AML obligations and the importance of AML controls and reporting. RCIS has apparently also applied to HMRC to be become a “supervisory body” for the purposes of trying to combat money laundering by its members (https://www.estateagenttoday.co.uk/breaking-news/2015/8/rics-pitching-for-anti-money-laundering-supervisory-role) .

    http://www.rics.org/uk/regulation1/firm-and-individual-guidance/money-laundering1/
    http://www.rics.org/uk/news/news-insight/news/reinforcing-aml/

    28 Aug 2015
    The UK Government estimates that serious organised crime in the UK generates upwards of £24bn a year.

    Property professionals are a particularly attractive target for criminals seeking to disguise or hide the proceeds of crime and therefore ensuring that our members are well prepared to face the challenges posed by criminals attempting to disguise the illegal origin of their profits is one of our top priorities.

    As a professional body under royal charter RICS duty is to promote and enforce the highest professional standards. The good reputation of RICS and all members is dependent on our continued commitment to high standards and effective regulation. With money laundering in property being a major issue facing all property professionals we urge members to ensure they are up to speed with their responsibilities.

    It would make more sense for “Estate Agents” to be better regulated by a professional body such as RCIS, similar to the SRA regulation of lawyers.

  2. Andrew Clarke says:

    “More on the minds of estate agents than in the past”. I fear that the Panorama effect will be short-lived. Now, a couple of estate agents being ‘banged up’ for money laundering (entering into an arrangement knowing or suspecting the funds were the proceeds of corruption), that would be different!

    • Welcome to the blog, Andrew, and thank you for your comment. Yes, there’s nothing like the whiff of a prison cell to bring the Regs to mind, is there? Perhaps just one or two estate agents, pour encourager les autres?
      Best wishes from Susan

  3. Andrew Clarke says:

    Hello Susan, You can also see this reflected in the levels of SARs reporting, there is always a spike in a particular sector following a conviction.
    I do think that the level of supervision also has a bearing. Outside of financial services, in reality the degree of proactive enforcement is negligible and this can be judged from the ‘fear factor’ that the various regulated staff exhibit. My personal view is that this light touch actually works against their members as it takes away an option for law enforcement. A financial investigator looking at the possibly nefarious activity of banking staff can normally rely on the regulator to be interested and keen to become involved. “Are you happy to leave it with us?” is an offer I’ve taken up in the past (UK FSA in my day). Outside of banking, for example the legal, accountancy or estate agency sectors, this is less likely and so the next stage in the ascending order of enforcement options is the 6am knock on the door!

  4. Robert James Long says:

    We in Law enforcement must take some blame for this as for a long time we tended not to focus on estate agents or see them almost as “victims”. We find some proffessions to be “too diffcult” to chase or we’re nto interested in them.

    Hopefully this will change in the future, and you’ll see more criminal prosecutions of estate agents failing their Due Diligence.

  5. DAWN TINDALL says:

    It also a shame that estate agents, or should I say letting agents, are not included. The amount of rent payable is sufficiently great to be above the occasional transaction de minimis and sometime a great deal more together with the obvious terrorist or criminal concerns over who is there tenant.

  6. Pingback: A welcome mat for money launderers | I hate money laundering

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