The property industry has long been the target of money laundering.
Purchasing property is a common method used by organised criminals to launder the money made from criminal activity. Research has shown that ‘41% of the most threatening criminal networks launder through property’ in the UK and Europe, highlighting how prevalent the problem is.
The size of the property market in the UK, paired with the high value of property assets, means that criminals can “clean” large sums of money in a single transaction, giving off the false appearance that it was acquired through legitimate means.
Do Estate Agents Need To Do AML Checks?
In short, yes, estate agents are legally required to carry out anti-money laundering (AML) checks and customer due diligence because of the high risk of fraud in property transactions.
Estate agents must carry out AML checks in accordance with the Money Laundering Regulations 2017. If they fail to do so, they could be fined, suspended from practising, or worse, depending on the circumstances and severity of the case.
Meeting this legal obligation is crucial to help tackle the economic and social damage caused by organised crime.
Why Are AML Checks Necessary For Estate Agents?
The reasons why estate agents need to do AML checks include:
- Compliance
- To help estate agents identify and prevent illegal activities
- To protect businesses
- To help tackle organised crime
1. Compliance
The first reason why AML checks are necessary for estate agents is that they help them remain compliant.
AML checks are an important part of compliance with the UK’s Money Laundering Regulations 2017 and Proceeds of Crime Act 2002.
These regulations apply to companies and individuals either doing business in the UK, or using services from the UK.
2. To Help Estate Agents Identify & Prevent Illegal Activities
AML checks are necessary because they help estate agents identify and prevent illegal activities.
This includes money laundering, fraud, and terrorist financing, amongst other financial crimes.
Some money laundering warning signs to help identify these activities include, but are not limited to:
- Cash buyers – Not all cash buyers are a cause for concern. However, if the buyer is vague regarding the source of funds then suspicions should be raised.
- Suspicious funding sources – For instance, if a completely unknown third party provides the funds or the funds are from multiple sources.
- Inconsistencies or hesitations – Inconsistencies in the information provided or a client being reluctant or refusing to provide information for a sale is a big warning sign.
3. To Protect Businesses
Another reason why AML checks are necessary is to protect businesses.
It is a legal requirement for estate agents to take the necessary measures to ensure that they are not inadvertently involved in criminal activities such as money laundering, fraud, and other activities.
AML checks are thus critical for UK estate agents and businesses to protect themselves from not only financial crimes but also reputational risk.
Are you interested in streamlining your AML checks? Look no further than Credas.
We enable estate agents to seamlessly carry out required anti-money laundering checks when selling a house, from ID verification to sanctions screening.
Contact our team to learn more about our AML compliance software, or book a demo today.
4. To Help Tackle Organised Crime
AML checks are also necessary to help tackle organised crime.
The economic and social damage due to this organised crime is vast. According to our own research at Credas, the amount of illicit funds laundered through the UK is estimated to be £88bn, while others have it at much higher, emphasising the scale of money laundering.
Money laundering enables many forms of organised crime, allowing criminals to advance their operations and conceal assets.
As such, estate agents and businesses must do their part to tackle the growing problem of organised crime, and AML compliance plays a significant role.
What Is Involved In An Estate Agent AML Check?
The scope of AML checks can vary. That said, an AML check carried out by an estate agent will typically involve:
Proof Of Identity
Estate agents will verify the identity of a client through official forms of ID to prove the name of the client, such as a passport or driving license.
Source Of Funds
Moreover, estate agents will require evidence of where the funds have come from, such as from regular wages from their employer and will verify this against bank statements.
Proof of Ownership
If a client is selling a property, proof of ownership will be required to ensure no other parties will benefit from the sale. This can be carried out by reviewing the title deeds of the property in question via Land Registry or through a third party such as ourselves.
How We Can Help
Credas is the leading IDV and AML due diligence provider to the UK estate agency and lettings sector.
As a market-leading eIDV provider for the UK property sector, we keep property transactions safe from financial crime and fraud every 5 seconds.
With our simple platform that allows you to conduct AML checks remotely and to the highest data security standards, we alleviate the burden of anti-money laundering compliance.
Get in touch to learn more about the services we provide, or book a demo today.
