Syedur Rahman of business crime solicitors Rahman Ravelli explains why an HMRC crackdown on estate agents must be seen as a warning to those working in property sales to tackle money laundering.
HM Revenue & Customs (HMRC) made unannounced inspections to 50 estate agents in England as part of a week-long crackdown on money laundering in the property industry.
HMRC officials targeted estate agents that they suspected of trading without being registered, as required under the Money Laundering Regulations. HMRC will now take action against those businesses visited who were failing to comply with the Regulations, with possible penalties including fines and prosecution.
In an attempt to highlight its crackdown on what it sees as agents failing to train staff properly or use due diligence regarding prospective buyers, HMRC announced that estate agent Countrywide has already been fined £215,000 for failure to comply with the Regulations while now-defunct online agency Tepilo was ordered to pay £68,595.
John Glen, Economic Secretary to the Treasury, said there would be "zero tolerance for firms prepared to turn a blind eye'' to the Money Laundering Regulations. HMRC Director of Fraud Investigation Simon York said that the HMRC visits were a wake-up call to estate agents who continue to ignore their legal duty to try and prevent money laundering.
This is the first intelligence-led, co-ordinated activity aimed at estate agents that are suspected of trading without registering with HMRC, as legally required. Under the Money Laundering Regulations, estate agents must carry out enhanced due diligence on customers and checks on their business' vulnerability to money laundering.
Estate agency is an area of work classed as being in the regulated sector – a sector recognised as carrying a risk of contact with those looking to launder the proceeds of crime. Estate agencies can have no excuse for not knowing this or ensuring they comply with the Money Laundering Regulations. After all, it is more than three years since the HMRC published a 41-page document outlining what estate agencies should do to avoid problems with money laundering.
With the maximum penalties for failure to comply with the Money Laundering Regulations being unlimited fines and up to two years in prison, estate agencies cannot afford to turn a blind eye to them.
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