The only substantial sanctions to occur for estate agency AML breaches in the UK were carried out in March 2014 by the Office of Fair Trading.
In a swansong episode of enforcement before regulatory responsibility was passed to HMRC in April 2014, the Office of Fair Trading fined three estate agents almost £250,000 for “significant and widespread” anti-money laundering lapses.
These were
- Hastings International of London (fined £48,000),
- Jackson Grundy of Northampton (£170,000), and
- Jeffrey Ross of Cardiff (£29,000).
The introduction of punitive fines for AML failures by the Office of Fair Trading in 2014 was a substantial development, but it is yet to be seen whether HMRC – the new supervisor for the sector – will follow suit and send a clear signal to the sector that AML non-compliance penalties will be enforced with significant fines.
MORE….
The Office of Fair Trading (OFT) fined three real-estate agents a total of £246,665 ($408,000) for “significant and widespread” anti-money laundering lapses last week.
Hastings International UK Limited based in South London was assessed a £47,966 ($80,000) fine, Jackson Grundy based in Northampton was fined £169,652 ($281,000), and Jeffrey Ross of Cardiff was fined £29,000 ($48,000).
The OFT said the three firms failed to apply adequate customer due-diligence measures or continued monitoring of business relationships as mandated by the UK’s 2007 Money Laundering Regulations.
Press releases 2014 – 28 March 2014
OFT fines three estate agents a total of £246,665 for breaching money laundering regulations
Three estate agents based in London, Northamptonshire and Cardiff have been fined a total of £246,665 by the OFT, for failing to comply with the Money Laundering Regulations 2007.
The Regulations are designed to prevent businesses from being used for money laundering or terrorist financing purposes and require regulated businesses to, for example, apply risk sensitive policies and procedures on the verification of customer identity, record keeping, training staff and reporting suspicious activity to the National Crime Agency.
Hastings International UK Limited (Hastings) is an estate agent with two premises in south London and was fined £47,966.
Jackson Grundy Limited (Jackson Grundy) operates its estate agency business from 10 premises and was fined £169,652. The company’s head office is in Duston, Northampton.
Cardiff-based Jeffrey Ross Ltd (JRL) had two premises in the city during the OFT investigation period and was fined £29,000.
The failures in all three cases were significant and widespread and include:
- Failures to apply adequate customer due diligence measures when carrying out estate agency work.
- Failures to conduct ongoing monitoring of business relationships.
- Failures to establish and maintain appropriate policies and procedures on adequate record-keeping, internal controls or risk assessments.
- Failures to train relevant employees in how to recognise and deal with transactions and other activities which may be related to money laundering and terrorist financing.
On 31 March 2014, the OFT’s anti-money laundering powers and responsibilities pass to Her Majesty’s Revenue and Customs in respect of estate agents.
Kate Pitt, OFT Deputy Director of Anti-Money Laundering, said:
- ‘The Money Laundering Regulations are designed to detect, deter and disrupt financial crime. We fined these three estate agents as they were failing to comply fully with the regulations, and so were more vulnerable to money laundering or terrorist financing activity.’
Hastings and Jackson were fined by the OFT on 26 March 2014 and have until 24 April 2014 to appeal. JRL was fined on 19 March 2014 and has until 17 April 2014 to appeal.
NOTES
- Under the Money Laundering Regulations 2007, the OFT may impose a penalty of such amount as it considers appropriate on a relevant person that fails to comply with certain provisions of the Regulations.
- See anti-money laundering FAQs. http://webarchive.nationalarchives.gov.uk/20140402142426/http:/www.oft.gov.uk/OFTwork/aml/aml-supervision-faqs
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