Estate agency branches could face an annual compliance bill of at least £45,000 as anti-money laundering responsibilities become a significant operational function, according to analysis from Coadjute.
The property technology and AML services provider estimates that an average branch may require one full-time compliance professional to manage its obligations.
Alternatively, Coadjute claims that dividing the work between negotiators could displace sales activity worth approximately £185,000 a year by reducing the time available to win instructions and progress transactions.
The estimates follow amendments to the Money Laundering Regulations that took effect on 30 June and the publication of updated HM Revenue & Customs guidance in July. The guidance requires estate agencies to assess their exposure to money laundering, terrorist financing and proliferation financing and implement suitable policies, controls and procedures. HMRC’s estate agency guidance forms part of a wider updated compliance manual.
AML BECOMES AN OPERATIONAL ROLE
Coadjute says the ongoing work includes business-wide and transaction-level risk assessments, customer due diligence, source-of-funds enquiries, record keeping, staff training and monitoring.
Agencies must also collect missing information, investigate exceptions, escalate suspicious activity and keep their procedures updated as requirements change.
HMRC says businesses must identify the risks relevant to their operations and introduce measures to manage them effectively. Its sector risk assessment also stresses that property transactions present a high money-laundering risk.
Contravening certain requirements can constitute a criminal offence, with penalties following conviction potentially including a fine, imprisonment or both.
END OF SIDE-OF-DESK AML
Dan Salmons (main picture, inset), CEO of Coadjute, says: “We’re seeing the end of AML as a side-of-desk activity. With the July HMRC guidance and the criminal risks, AML compliance has moved well beyond being a series of checks that can simply be absorbed into someone’s day job.
“Agencies really have to understand their risks, have the right policies and procedures in place, and demonstrate that those procedures are actually being followed.
“The big question for them is who is going to own and operate the compliance function day to day, and how is this increasingly specialist work going to get done?”
SOFTWARE IS NOT ENOUGH
Coadjute argues that technology can accelerate individual checks but cannot take responsibility for assessing risks, investigating discrepancies or ensuring that procedures are followed across a business.
Salmons adds: “It’s really not something a bit of software can solve. For other highly regulated activities, like accounting, agencies call on professionals. It’s time to start treating AML the same way.”
