Is Your AML Procedure up to Scratch?

21st March 2025 | Caroline Vernon | Residential Property, Commonhold, Property Ownership

All estate agents in the UK are required to comply with a number of laws designed to prevent illicit funds passing through the UK.

These include the Proceeds of Crime Act 2002, the Criminal Finances Act 2017, the Terrorism Act 2000. The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (“5th MLD”) and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLR 2017”). The primary money laundering offences apply to everyone, and you commit an offence if you know or suspect that the property is criminal property.

Real estate transactions are seen by the UK Government and crime agencies as posing a particularly significant money laundering threat. As such the MLR 2017 require estate agents to understand and verify exactly who their customers are and have evidence that they have completed KYC checks. Should an estate agent become suspicious of a prospective customer or existing customer’s activities engaging in money laundering or terrorist financing activity, it must report this to the National Crime Agency. You need to take your anti-money laundering responsibilities very seriously, as if you do not complete KYC checks you would undermine your corporate responsibilities and also place yourselves at risk of prosecution.

Estate agents in the UK are required to comply with, amongst other things, legal and regulatory obligations including those defined under the MLR 2017 and obligations imposed by the Royal Institute of Chartered Surveyors (“RICS”). These place various key requirements upon estate agents, with one being to undertake KYC checks to verify the identities of their customers. For corporate customers these checks will need to be extended to enable you to identify the Ultimate Beneficial Owner and/or those who have ultimate executive control.

The client will need to provide you with documentation confirming identity and primary current residential address. Where they wish to sell their property Land Registry checks should be made to verify the client is the legal owner of that interest and has the right to sell. Where a client wishes to buy a property from one of your clients, or where the client wants advice on a particular purchase, you will also need information clarifying the origin of the funds being used to complete the transaction and a summary of your source of wealth.

You cannot place reliance on kyc carried out by external professionals.  You are ultimately responsible by law for ensuring that the KYC checks have been undertaken properly and comprehensively, you should undertake your own KYC checks.

The information must be used for the sole purpose of completing your KYC checks in order to meet legal obligations.  It must be held confidentially and should not be shared with any third parties unless required to, in order to comply with a regulator or law enforcement authorities.

Estate agents are regulated by HM Revenue & Customs (“HMRC”) to meet requirements of MLR 2017.

If a client fails to provide the necessary information, then you should not act on a client’s behalf.

You are legally required to periodically re-confirm the KYC information you hold about your clients if you remain in an on-going business relationship with them. The period of time that elapses between subsequent KYC approvals is dependent on a number of perceived risk criteria.  We obtain updated ID from our clients every two years.

At Sherrards Solicitors, we provide expert legal guidance on the evolving reforms, ensuring property owners, investors, and developers are well-prepared for the future of property ownership.

To find out more, contact the Residential Real Estate team here or contact Caroline using the details below.