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New anti-money laundering regulation is here!

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Sat 29 Jul 2017

New anti-money laundering regulation is here!

New anti-money laundering regulation is here!

                           

 

New anti-money laundering regulation has come into force which directly effect estate agents and estate agency businesses. Here's what you need to know about the changes.

On 26 June the The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, more commonly referred to as the 4th Money Laundering Directive, came into force in the UK. These regulations supersede the Money Laundering Regulations 2007 and subsequent amendments.

Due to the General Election and the forming of a new Cabinet, the publication of the final regulations (which were only released on Thursday 22 June) is believed to have been delayed.

The legal obligations are designed to reduce the social and economic impact of organised crime and impede transfer of money to support funding for terrorist organisations in the UK and around the globe. The regulations aim to ensure that companies know who their customers are.

NAEA Propertymark has been leading the calls for guidance and specifically clarity on sales agents' obligations to carry out customer due diligence (CDD) on buyers.

So, what's changed?

The following is a non-exhaustive list of regulation requirements that will impact Estate Agency Businesses (EABs) directly:

  • Your risk assessment, policies, controls and procedures need to be documented in writing and be supplied to a supervisor on demand.
  • Larger, more complex businesses are required to:
    • appoint a Compliance Officer from the Board of Directors (or equivalent) with responsibility for compliance with the Regulations.
    • carry out screening of relevant employees to determine that they have the knowledge and skills to undertake their functions effectively and that they are of good conduct and integrity.
    • establish an independent audit function to monitor compliance and make recommendations for improvements where necessary.
  • Enhanced due diligence measures for Politically Exposed Persons (PEPs) and their associates is extended to those holding public office in the UK.
  • EABs are required to undertake customer due diligence (CDD) on both parties to a sale transaction. The draft guidance stipulates that CDD should be undertaken on the buyer before informal acceptance of an offer by the seller.
  • Owners and management of estate agents will be required to undertake a “fit and proper test” with their supervisory authority. Relevant Criminal offences that may cause an individual to fail the test are contained within Schedule 3 of the regulations.
  • Advise the supervisory authority of the names of the nominated officer (MLRO) and compliance officer within 14 days of the appointment and any subsequent change.
  • EAB’s can now rely upon another regulated business (including another EAB) to provide CDD for them before entering into a business relationship with a buyer or seller and such CDD should be supplied immediately upon request by the third party.