United Kingdom

HMRC reveals scale of estate agency AML fines

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The HM Revenue and Customs logo

His Majesty’s Revenue and Customs (HMRC) fined estate agencies more than £1.6 million for anti-money laundering (AML) rule breaches between April and September 2023, according to their penalty list released this month.

The department says 254 estate agency businesses failed to register or re-register for AML supervision. The largest fine was over £50,000.

AML registration rules for estate agents are quite simple: if a business performs any “estate agent activity” as defined under the Estate Agents Act 1979 (such as valuing properties, arranging viewings or advising potential buyers and sellers), it needs to register.

It’s a bit more complicated for letting agencies. They don’t need to register unless they have individual residential or commercial rents that are “at least €10,000” for rents of a month or longer. PayProp has engaged with the government on refining this rule and how it could be made simpler for agents.

Registered businesses then need to re-register (and pay an annual fee) every year.

Does the property industry have AML compliance issues?

The vast majority of estate and letting agencies meet their AML registration requirements without issue. Last year, GetAgent estimated there are around 24,500 estate agencies in the UK, suggesting a non-compliance rate of about 1%.

But estate agencies often dominate HMRC’s penalty lists. In 2022-23, the property sector made up almost half of all AML-related fines issued, and the latest release also shows a large number of property businesses.

Additionally, some agencies will have been fined for other AML breaches, such as failing to produce firm-wide AML documentation or breaching rules on Customer Due Diligence. These can be more complex than a simple registration and, according to some industry insiders, many agents see them as a distraction from selling properties. If agents want to avoid ending up on a HMRC list, they will need to take compliance rules seriously.

Other estate and letting agent headlines

TV presenter claims property industry “broken and dysfunctional” – The Negotiator

Agency earnings lagging other commission-based professions – Estate Agent Today

Estate agent accidentally burns down £1.5 million house while preparing for viewing – Property Industry Eye

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