Near tenfold increase in fines against Estate Agents for Anti Money laundering breaches

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The amount of fines imposed on Estate Agency businesses for breaching anti-money laundering (AML) rules has increased by 980% in the last year, with the fines issued to Estate Agents totalling £772,618. However, during this same period the total of all AML fines issued in the UK fell by approximately £500,000 year-on-year, according to research by Credas Technologies, an identity verification checks provider.

In addition to the surge in fines against Estate Agents, Accountancy firms faced a similar spike of a 1083% increase in the last year.

Whilst on first reading these figures would appear to present significant cause for alarm, there are signs that the underlying level of fines incurred by estate agents is falling. The total of all fines issued to estate agents since the start of the pandemic (2020 to 2022) is 41% lower than the total sum of fines issued in the two years prior (2018 to 2019).

Credas’ research also reports that there are a few other important factors to consider. It noted that the Estate Agency sector accounts for a high proportion of all new business registrations for AML compliance, so an increase in the level of fines is to be expected in line with the new registrations.  Credas also suggests that the sector may have experienced an increase in AML compliance slip ups as the property market sprung back to life in an unprecedented boom post COVID lockdowns.

Businesses operating in certain sectors such as estate agency are legally required to register for AML supervision by HMRC, under Anti Money Laundering Regulations. Businesses who fail to employ sufficient practices, monitoring and protections can face heavy fines as a result.

This news follows research earlier this year which reported that up to 70% of professional firms had not updated their AML procedures in light of the increased sanctions being imposed on Russia (see Brunel News August 2022).

Matthew Golightly, Associate Director – Claims & Technical of Brunel Professions said: “Firms breaching AML requirements face the risk of heavy penalties along with reputational damage. Following on from the news we reported earlier this year, it is clear that AML compliance officers should carefully review whether their procedures are adequate in the current environment. Whilst some comfort may be taken from the downward trend in fines over the last 5 years, the recent spike shows that changes in the way businesses are operating and issues affecting the wider world can quickly lead to procedures being insufficient and result in breaches. The report by Credas is a warning to all risk managers that AML procedures should be regularly reviewed and updated, and most importantly measures should be put in place to ensure staff are following the procedures.”

Further commentary on the AML fines can be found at Property Industry Eye, Property Reporter and The Intermediary.

ProfessionalIndemnity.com is owned by Brunel Professions, which is a leading professional indemnity insurance broker in the UK.  Click here to get a quote or call 0345 450 1074 to speak to a broker.

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