Estate agents have been warned not to treat digital identity checks as a “silver bullet” for anti-money laundering compliance following the publication of new Government guidance.
The updated guidance confirms that certified digital identity services can be used to support identity verification under Regulation 28 of the Money Laundering Regulations.
However, regulated businesses remain responsible for assessing customer risk, applying enhanced due diligence where required and maintaining clear, audit-ready records.
Smart Compliance, a guaranteed compliance provider for estate agencies, says the clarification is welcome but stressed that digital ID forms only one part of the wider customer due diligence process.
ONGOING MONITORING
The firm says agents must still evidence risk assessments covering the client, transaction and geography, carry out sanctions and PEP checks, apply enhanced due diligence where appropriate, conduct ongoing monitoring and maintain detailed file notes explaining what was done and why.
Amy Shields (main picture, inset), Commercial Director at Smart Compliance, says: “Digital ID can help confirm who someone is, faster and with less back and forth. But it does not understand context, and context is where risk lives in property transactions.
“The liability still sits with the regulated business. If your file cannot show your reasoning and your process is not consistent, a slick identity check will not save you.”
AUDIT-READY
She adds: “Too many agencies run checks but cannot evidence a defensible process. When an audit happens, the pressure usually comes down to two things: can you show your reasoning, and can you show consistency.
“That is what supervisors care about.”
Smart Compliance is advising firms to treat digital identity as one building block within a broader compliance framework, rather than a replacement for it.
Shields says: “Use digital ID to reduce friction for genuine buyers, tenants, landlords and vendors. But keep the risk-based approach at the centre, and make sure every file tells the story clearly. The goal is simple: audit-ready, every time.”
