According to the Financial Times, last week HMRC launched its most high-profile crackdown yet on the real estate sector, “raiding 50 estate agencies suspected of failing to register under anti-money laundering rules and revealing fines to others”.
Reporter Judith Evans writes that, according to industry players, “the moves prompted panic among those agents who have been lax in carrying out due diligence on home buyers and sellers”.
The crackdown comes after a series of announcements and activities aimed to tackle money laundering in the real estate sector in the UK. For instance, in October 2018 Ben Wallace, minister of state for security at the Home Office, told a parliamentary inquiry that estate agents had been “one of the weak links” in reporting suspicious activity.
Since 2017, estate agents in the UK have been required to perform “know your customer” checks on buyers and sellers of properties. These procedures include collecting and verifying the authenticity of identity documents/passports and proof of address documentation. When an initial assessment raises doubts regarding the origin of funds or the nature of the transaction, estate agents are required to file a suspicious activity report (SAR) with the National Crime Agency. According to the FT, “agents filed 710 of these in the 2017-18 financial year — up 32 per cent from a year earlier, but still only 0.15 per cent of the reports filed by all groups including banks and lawyers”.
As the real estate sector is set to face even more demands (by 2020, agents will also be required to carry out AML/KYC checks on lettings deals), RegTech solutions have an important role to play.
Know Your Customer‘s end-to-end compliance solutions are fast to implement and ensure full regulatory compliance without the need to add more staff to the team, helping real estate agencies of all sizes to address the challenges introduced by the new regulatory requirements. If you’re interested to find out more, you can request a demo here.