Estate agents are one of the gatekeepers when it comes to preventing money laundering in the UK, along with solicitors and banks.
Laundering money isn’t a petty crime; the government is worried about the influx of illegal money because it is so often linked to terrorist groups, people trafficking and/or illegal drugs.
The preview clip showed an agent suggesting that he will circumnavigate the legal requirements for documentation. What followed in the program was a variety of ways of responding to ‘Boris’ – the reporter in disguise.
There is likely to be a backlash throughout the industry, especially as some of the agents caught in the spotlight are high street names.
While it is obviously not acceptable to do a deal with a person or institution that you suspect of money laundering, and stealing, it is also true that you must not let the client know that you suspect them of money laundering. So it is hard to get the balance right when faced with this sort of situation.
What the estate agents should not have done is say I’m afraid you cannot pay me that way because it is in contravention of the money laundering legislation in this country. What he must do is report it to the person in his company who is designated the Money Laundering Reporting Officer (MLRO), and then must not tell anyone else.
Making suggestions to put the customer in touch with bent solicitors and suggesting ways to beat the system are out of order, but ‘playing along’ to get more information out of him might not be.
There are no hard and fast rules – each MLRO must use his or her discretion as to what to report and when. Government guidelines are just that, they are guidelines to be interpreted and Estate Agents are left to do the best they can to show due diligence in these situations.
One of the most difficult things to balance is the requirement to prevent ‘tipping off’ the prospective purchaser that you suspect them of money laundering. Letting the client know you are onto him is also an offence – so in a set up like this the agent is damned if he does damned if he doesn’t.
It will be interesting to see what happens in the industry following the From Russia with Cash program. It will also be interesting to see what the outcome of the subsequent investigations by the NAEA which were announced late last week. They threaten expulsion for any member contravening Anti Money Laundering legislation.