Agents urged to review AML policies following recent HMRC fines

Recent substantial fines issued by HMRC are a harsh reminder to agents to ensure that their Anti-Money Laundering (AML) policies are up to date, and they have control testing in place. This is according to Paul Offley, Compliance Officer at The Guild of Property Professionals, who adds that agents should do a compliance control check from time to time to ensure that everything is in order, and they are following the correct guidance and procedures to comply with HMRC regulations.

Offley says that the first thing that agents should do is login to their Government Gateway account, go to the AML section and check that their supervision status is showing as ‘supervised’ or ‘pending and able to trade’, this is crucial. “It is possible to miss a renewal and the supervision status lapses, so it is important to check this to ensure the correct status is reflected,” he adds.

According to Offley, the next thing to do would be to go through emails to make sure that there are no messages from HMRC that haven’t been seen or attended to. If both aspects have been done and are up to date, then the agent can put their mind at rest that their supervision status is confirmed and accurate.

“The next aspect that agents should check is their AML Business Risk Statement. This isn’t the AML policy, but rather the statement that the agent prepares based on the transactions they deal with and the customers that use them. This is a document that the business will need to have as part of their governance and is a document that should be reviewed on an annual basis to make sure it still reflects both the type of transactions and customers the business deals with. If out of date, ensure that it is amended appropriately,” advises Offley.

Once the Business Risk Statement has been checked, the agent can move onto reviewing their AML policy. “This would be the document outlining how the agency is going to meet the AML guidance required by HMRC. The policy should reflect what happens in the organisation with regard to AML, looking at how the agent will do their checks, who they are going to check, and the process. If any procedure changes within the business, this should be updated within the AML policy to ensure that it reflects the current practises within the agency. Business owners should take some time out to read through this policy and ensure that it absolutely reflects the processes and procedures within the business, demonstrating how HMRC guidance is adhered to. It is always good to get everyone within the agency to read through the policy once a year and sign that they have done so,” Offley comments.

Something to consider, as a business owner which HMRC call a responsible person, the requirement is to demonstrate the training that is provided to staff throughout the 12-month period. “Business owners will need to demonstrate a record of the training their staff attended, detailing the date, who it was led by, and course content. This can be as simple as internal briefings,  a webinar or article relating to AML- as long as it is put on record,” says Offley.

He notes that the final aspect is control testing. “As an organisation it is important to demonstrate that the policy which has been put in place is working. Whether once a quarter or once a month, the business owner should select a few transactions and go through them checking aspects such as legal ownership, risk assessment, a PEP check, financial sanctions check, ID and verification, and proof of source of funds. Have a spreadsheet with the property addresses and have a column that reflects whether they meet the standards or not. Obviously if there are any gaps, it needs to be demonstrated that something has been done about it.  It is crucial that the business has evidence that there is some kind of control testing in place and their policy is effective,” Offley concludes.

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Halifax house price data showing a 2% quarter on quarter increase

Daniel Austin, CEO and co-founder at ASK Partners, said: “This data shows that the property sector is showing signs of recovery and the outlook has considerably improved. Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value.

Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.

“A RICS survey uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns. With housing set to be a battleground point in this year’s election and as the sector moves to the top of the agenda for all parties, we hope to see a long-term plan for new homes, including social housing, however, we expect we will see more short term fixes. Stimulus will be welcome but can create unnecessary froth.

For voters, a stamp duty holiday or reprieve may be a welcome sign. For developers, eased planning regulations for brownfield sites and conversions will be popular. However, the government will be faced with a challenge – striking a balance between trying to increase housing supply and therefore affordability by supporting developers and private landlords but appealing to voters who do not want to see greenfield development. The planning system remains hotly political and as a result, landlords and developers are unlikely to see much in their favour.

“As a debt provider, we hope to support the best sites in prime locations with well-capitalised sponsors who understand their product. Following this strategy, we aim to bolster developers’ initiatives with the flexible underwriting approach that is necessary for navigating current planning rules and market uncertainty.

This will enable us to continue to offer opportunities for the growing number of private individuals opting to invest in property debt.”

ASK is a specialist, independent property lender, established by an experienced team of three partners in 2016 to provide bespoke and flexible real estate finance solutions. Building a team to complement their own unique blend of skills, they have now lent in excess of £1.45bn across over 110 transactions. Every transaction is underwritten by ASK and the company has earned a reputation as a trustworthy partner.

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Andrew Stanton’s PROPTECH-X ‘Proptech & Property News’ in association with Estate Agent Networking & News Now publications. #proptech #property #realestate #digitaltransformation #startups