AML Checks for Estate Agents & Property Companies

Every estate agency business in the UK is legally required to be registered with HMRC for money laundering supervision. Estate agencies that fail to register can be hit with fines. 

According to a January 2022 report, a quarter of estate agents in the UK had not yet registered with HMRC for the purposes of complying with AML rules, some four years after the law required them to comply. This meant that thousands of estate agents were committing a criminal offence by failing to register themselves with the department. 

Such contravention of the law could lead to significant fines for your property business, depending on the number of branches your organisation has. These fines are typically around £5,000 to £6,000 even for smaller estate agents that fail to register for AML purposes.

Registration with HMRC should be the responsibility of the Money Laundering Reporting Officer (MRLO), the nominated individual in your company who’s put in charge of implementing AML policies. AML checks for estate agents will be controlled by this individual, who will be expected to monitor customers and report suspicious activity as and when is appropriate.

MLROs will also be responsible for conducting AML risk assessments in which they identify and evaluate possible suspicious activity to mitigate the risk of money laundering. This risk assessment process can be easily streamlined with the help of SmartSearch. By using our service, we can tailor an AML risk assessment package to the needs of your industry, making your compliance effortless. 

Another key part of estate agents’ AML obligations is ensuring that a prospective property buyer has obtained the money for their purchase from a legitimate source.

So, for every property transaction you handle, you will need to obtain evidence of where the buyer’s funds have come from, otherwise known as a ‘Source of Funds’ check. If, for example, the buyer claims they have earned the money from regular income as an employee, you should be able to verify this against bank statements.

For any property transaction, there is a need to seek proof that the person selling the property is the genuine owner. You can check this by looking at the property’s title deeds via the Land Registry. The title deeds will show the names of the current owners, which estate agencies are required to cross-reference against the seller’s IDs and a recent utility bill. 

There has been a legal requirement since 1990 for all residential properties in England and Wales to be registered on the Land Registry Portal. So, it is likely that any given property is registered already. 

In the event that a particular property your client is looking to sell is not registered, the owner will need to find the property’s original deeds, which might still be with their mortgage provider or solicitors who handled their property transaction previously.

If the property owners are still unable to find the deeds, they will need to apply to the Land Registry for a Title Absolute. This can be a time-consuming process, so estate agencies should be proactive in determining at an early stage whether this will be needed for a given property transaction. That, in turn, will enable the owners of the property to apply as soon as possible. 

After collecting these documents, you are required to record and keep them on file for five years.

When performing your due diligence by fulfilling AML checks for estate agents, you are required to take the appropriate steps to verify the identity of your clients. You can do this by – among other measures – requesting and obtaining a form of official ID, such as a passport or driving licence, to prove the individual’s name. A recent utility bill, meanwhile, will show the client’s postal address. 

After collecting these documents, you are required to record and keep them on file for five years.

Once your estate agency business has verified the client’s identity, you will need to assess the risk, if any, of entering into a business relationship with them. 

This will necessitate screening the individual’s details against sanctions and global watchlists, in addition to carrying out PEP (Politically Exposed Person), SIP (Special Interest Person), RCA (Relatives and Close Associates) and adverse media screening on them. 

As critical as these checks are for the purposes of AML & compliance, they can also be onerous and time-consuming for many estate agencies. So, don’t hesitate to choose SmartSearch to streamline all of these tasks into a single, easy-to-use platform.