Earlier this year, the introduction of new anti-money laundering legislation made it a legal requirement for estate agents to keep an eye out for the use of ‘dirty money’ by clients looking to purchase properties. However, the legislation was rushed in to such an extent that many estate agents are still entirely unsure as to what they should be doing and how they should be doing it.
The Fourth EU Anti-Money Laundering Directive came into effect on June 26 with relatively little fanfare. The idea being that the EU wanted estate agents to play a more active role in the detection and prevention of money laundering activities taking place across the UK property industry. But for reasons that haven’t been (and perhaps never will be) explained, the usual 21-day window prior to the legislation being implemented didn’t happen. Instead, estate agents were given just 24 hours to get on-board with the legislation.
Which was, suffice to say, nowhere near long enough.
As it’s an EU-wide measure, it’s been a case of individual governments ironing out their own policies to ensure compliance. And as the UK remains a member of the EU for the time being at least, it’s now a fully enforced UK law too.
The problem being that many estate agents have, quite understandably, interpreted the whole thing as a huge burden and additional responsibility they may struggle to cope with. In reality, economists and experts have stated outright that there’s no reason for panic whatsoever. And nor do most estate agents need to take any kind of drastic action, or even alter their typical operating methods to a significant degree.
Instead, the new legislation is being pushed as an opportunity for estate agents to take their overall compliance and diligence to a higher level – predominantly through common sense and logic. The only real difference being that estate agents will now be required to ask a series of more probing and intrusive questions than before, to identify any signs of suspicious behaviour or potentially illegal financial activity.
Which for the time being may come across as awkward and difficult, though will eventually become second nature. A standard part of the process for thousands of estate agents all over the country. Questions will need to be asked regarding savings and debts, financial commitments, salary/income and so on. Just as banks are required to both note and report any signs of suspicious activity, it’s simply the same being brought over to estate agents. With such vast sums of dirty money already being tied up and laundered in the UK property market, the time has apparently come to clamp down on its prevalence.
Not just here, but across the UK in general.
Whether the legislation sticks or remains in its current form when the UK leaves the EU in a few years remains to be seen. For the time being though, estate agents have little choice but to get on-board with the new rules.
For more information on alternative, intelligent financial solutions for property purchases and investments, get in touch with the UK Property Finance team today.