The process of buying a new home is often one fraught with stress, as you compete with other parties who are going after the same property. As a result, many wish to complete the process as quickly as possible. But, before a sale can take place, many people find themselves asking, ‘How long do money laundering checks take when buying a house?’ as this process can potentially be complex.
At SmartSearch, we are anti-money laundering (AML) experts who can help you stay compliant with the crucial, ever-changing government regulations. With our award-winning service, you can protect your business and ongoing transactions with all-encompassing Customer Due Diligence (CDD) checks, Source of Funds (SOF) checks and much more.
The property sector is a high-risk industry when it comes to money laundering, making our service all the more important to help you prevent fraud and financial crime. If you’re working with potential new homeowners, you can use our service with the confidence that we’re a government-certified Identity Service Provider (IDSP) that can perform Know Your Customer (KYC) checks in less than 2 seconds.
But, no matter if you’re an estate agent or a hopeful homeowner, let’s get into the details of what AML checks are necessary in the real estate industry.
Let’s start with addressing ‘what are AML checks for estate agents’. In accordance with government regulations, estate agents must participate in multiple checks and procedures to ensure that they are preventing illegal money laundering activities. These checks are crucial, not just to tick the box of legal compliance, but also to protect themselves and their business against reputational damage as a result of malpractice.
Estate agents have to abide by a robust set of AML standards, but the foundations of their checks and procedures for the consumer include:
It’s difficult to state an exact period of time when it comes to the question of ‘How long do AML checks take?’, as every transaction is different. Generally speaking, however, most AML checks when buying a house are straightforward and will be completed anywhere between 5 days and 2 weeks, with this depending on several different factors.
During this process, buyers have to provide proof of identity, proof of funds and source of funds. How quickly your AML checks are completed is dependent on the speed at which you provide these documents. Other factors that could affect your AML process include whether Enhanced Due Diligence (EDD) is necessary, as well as the efficiency and workload of the party carrying out the checks.
When buying a property, you’ll be relieved to hear that the AML process is pretty simple. Essentially, the process is in place to prevent fraud and money laundering, so as long as you can easily prove the legitimacy of your identity and funds, the procedure should be swift. The AML operation itself is there to verify your identity and source of funds, so all it takes is providing the following information.
A vital step as part of a successful and robust AML programme, identity verification is the simple process of ensuring that a customer is exactly who they claim to be. This procedure involves confirming that the individual is legitimate, making sure that the individual is the claimed legitimate person, and finally ensuring that their details aren’t associated with any illegal activity.
Identity verification can be completed with any of the following valid documents:
Although each organisation is different, with its own criteria for identity verification, the documents listed above are standard proof of identity that are used across the industry. Other documents, such as provisional driving licences, mobile phone bills and credit card statements, are not acceptable as forms of identification. The full list of valid documents can be found on the government website.
Address verification should be an essential step in a company’s KYC process, and is the simple act of making sure a customer is who they claim to be. This helps companies assess potential risk profiles and suspicious activity, easily allowing them to carry out their necessary due diligence.
The following documents can be used to verify your current address, as long as they haven’t also been used to verify your identity:
Proof of funds doesn’t have to be provided prior to you putting an offer in for a house, but it will be required following this. A self-explanatory check, this procedure ensures that a customer has the money they need to make the purchase and that this money has been obtained legally.
Often part of the very same stage, a source of funds check will also be carried out to evaluate whether your money has been sourced from a legitimate place. Documents necessary to fulfil this requirement include:
Eager to get started but still wondering ‘How long do money laundering checks take when buying a house’? The AML process can be hastened by making sure you prepare for a smooth property transaction that doesn’t result in failure or EDD, which will lengthen the process further. If time is of the essence, consider following these guidelines to streamline your process:
Alongside financial institutions and cryptocurrency services, the property market is one of the most vulnerable sectors when it comes to money laundering. This is due to the large amounts of money that are used in transactions, and the potential for real buyers to be hiding behind illegal businesses. It is therefore crucial for professionals in the property sector, as well as hopeful homeowners, to be aware of the following AML red flags.
Different countries operate with vastly different laws regarding AML regulations. Funds from foreign buyers should, therefore, be treated extremely carefully, particularly if there is a considerable, unexplained distance between the buyer and the actual property. Money laundering varies across the world, but if an individual is from a high-risk country, they have the potential to be engaging in corruption or terrorist financing.
A buyer who is trying to protect their anonymity should be treated with extreme caution. The same can be said for a property that is being purchased through a shell company. In the instances when this occurs, a service should run an Ultimate Beneficial Owner (UBO) check to evaluate the exact individual who is trying to carry out the transaction.
If you find inconsistencies between the income of the buyer and the property value, this should be treated with caution. The same goes for parties who purchase at a price that is inconsistent with the true market value of the property.
During these occasions, companies should conduct a thorough source of funds check, followed by an EDD check if necessary. Then, if no legitimate information is gained, a SAR should be filed.
In general, property is purchased through the use of a mortgage. If a buyer instead attempts to pay with cash, although this is entirely legal, it should raise suspicion and be treated with the proper due diligence procedures.
It is a legal requirement and a moral obligation to abide by the AML regulations set out by the Financial Conduct Authority (FCA) and HMRC. In fact, HMRC recently published new guidance for estate agents in regards to upholding proper AML standards. This guidance regarding anti-money laundering checks for estate agents is broken down into stages below:
Since all estate agent companies must be registered with HMRC before any business can take place, this step will likely be completed long before AML regulations are considered. Registration with HMRC is simple and includes the payment of fees and the passing of both an approval process and a ‘Fit and Proper’ test - a series of checks that ensure key company individuals are capable and qualified to fulfil the role. HMRC registration needs to be renewed every year in order to keep legally operating as an estate agency.
In accordance with Regulation 20 of the Money Laundering Regulations 2007, it is essential that every necessary business has a Money Laundering Reporting Officer (MLRO). This individual must be selected by your organisation and must then be approved by the FCA before they can begin fulfilling their responsibilities. HMRC has to be informed about any changes to MRLOs as they will be required to pass approval and ‘Fit and Proper’ tests.
Any concerns regarding money laundering activity should be communicated to the MRLO - the designated and responsible person to assess the risk of the situation. If necessary, precautionary measures can be taken, and the relevant law enforcement agencies can be contacted. In addition, the MRLO is also responsible for:
HMRC will carry out regular audits of your company’s AML procedure, so making sure that yours is up to date and properly implemented is crucial to fulfil your obligations. All employees should have easy access to this rigorous set of policies, with these guidelines requiring comprehensive detail, which may vary depending on the size of your business. An internal AML policy must include a rundown of your entire process, demonstrating how your company is carrying out its due diligence. Therefore, they involve the inclusion of the following:
It is the responsibility of the relevant company to make sure that all workers who deal with customers and money have had the necessary training to identify suspicious activity. While the MLRO might be the reporting individual, all staff members should receive training that pertains to their AML duties, instructional information on how to deal with suspicious transactions and other details about AML red flags.
HMRC has provided a guide on what training should be provided, suggesting that these lessons can be delivered in a variety of formats.
Transactional and contractual records should be kept for a minimum of 5 years. Documenting your AML practices with comprehensive evidence is necessary to ensure that your estate agency is abiding by regulatory requirements to prevent money laundering, terrorist financing and more. When undergoing an AML audit, the auditors will ask for documents such as:
Customer due diligence should be conducted on every new customer at an estate agency, no matter if they’re a buyer or a seller, before a transaction can take place. While comprehensive, these checks are often simple and straightforward. With this being said, some customers may require additional time and resources to be put into their case - this is where Enhanced Due Diligence (EDD) becomes necessary.
Know your Customer (KYC) and CDD checks are often performed manually by checking and validating an individual’s physical ID documents. At SmartSearch, we provide a platform that allows you to simply and effectively execute comprehensive CDD checks. Use personal information, address documents and even biometric identification to create a conclusive profile. Contact us now to get a demo and see for yourself how our platform can transform your operations.
All relevant staff members should be trained on how to identify suspicious activity, with AML red flags having already been discussed earlier in this blog. Customers should be constantly monitored throughout their time associated with your estate agency, and if suspicion arises after the relevant AML checks for a client, a SAR report should be filed as soon as possible.
Suspicious activity can be identified in a number of ways, with some of the most common clues including:
At SmartSearch, we have built a robust platform that’s specifically designed with estate agencies in mind. Let us help you effortlessly fulfil your AML obligations with an all-encompassing solution that allows you to complete your work with the peace of mind that we’ve got you covered. Easy to integrate alongside your current operating systems, we’ve created a platform that is perfectly tailored to your needs.
Committed to helping you excel, with SmartSearch, you can streamline your operations by:
Failure to comply with government AML regulations can lead to a range of different consequences depending on the severity of the offence. More often than not, financial penalties are the most common punishment for non-compliance, which can severely damage a company’s cash flow and reputation. But, for more serious cases where there is evidence of major financial crime, the offender(s) could face up to two years in prison.
Early in 2025, the most recent compliance and registration penalties were published by HM Revenue and Customs. These figures highlighted that between October and December 2023, 144 agents were sanctioned with fines, largely ranging between £1,250 to £52,000. With this being said, one significant case saw a company be fined £175,701 for multiple AML breaches, including the failure to conduct customer due diligence, retain records and adequately train staff.
For businesses, it’s crucial to stay compliant with the legal guidelines set out by the Money Laundering Regulations and the Proceeds of Crime Act (POCA) 2002. If these rules are not followed, companies could face fines that range up to millions of pounds. In addition, individuals could face other penalties for flagrant non-compliance, including prosecution. Such punishments could substantially harm the credibility of an organisation.
For customers, however, AML regulations may not seem as important. Yet, to uphold a robust economy and maintain integrity, AML checks are crucial in order to prevent financial crime, terrorist financing and fraud. After all, financial crimes significantly hurt economies, with the UK seeing £570 million being stolen in payment fraud in the first half of 2024. This causes further economic instability, meaning an increase in inflation and general unemployment.
If you’re wondering, ‘What is money laundering?’, in its simplest terms, it can be defined as the process criminals use to disguise the origins of illegally obtained funds. This is achieved by ‘washing’ the money through various financial processes, hiding its origins to eventually return to the launderer as ‘legitimate’ funds. Common money laundering examples include:
Multiple parties are responsible for carrying out robust AML checks, including mortgage lenders, estate agents and solicitors. Estate agents must verify proof of identity and proof of funds before a solicitor or licensed conveyancer conducts a source of wealth check. If applicable, a lender will also conduct a comprehensive AML check before approving a mortgage.
No, any AML checks conducted by an estate agent or solicitor will not affect your credit score. AML checks are only recorded as soft searches on your credit report, which don’t affect your score. If a mortgage provider performs a hard credit check when reviewing your case, however, this could affect your credit score.
Estate agents will usually pay for AML checks to be conducted, but sometimes this cost is charged to the customer.
For a complete solution to your AML needs, SmartSearch is here to ensure that you’re completely compliant with UK laws and regulations. Accessible for every business, from property development to accountancy and beyond, our solution is tailor-made to your needs. Regardless of the size or budget of your organisation, we can provide a complete solution that doesn’t compromise on quality.
A unique AML platform, SmartSearch’s KYC solution is the only one to provide full Sanction and PEP screening and ongoing monitoring for a complete, all-in-one service for all your needs. Streamline your operations with the endless benefits of our service, giving you real-time AML checks in seconds while preparing you for regulatory visits to give you some peace of mind.
With over 7,000 global customers, our clients are constantly communicating their satisfaction with our service. As ‘Compliance Adviser’ Sunil Karadia at Clifton Private Finance stated:
“SmartSearch has completely exceeded our expectations. The two main things that have stood out are the usability of the platform and the exceptional level of customer service.”
To join our thousands of customers already enjoying our specialist services, contact us today, or why not consider getting a demo to experience our solutions in action, firsthand?