AML Guide for Estate Agents

What is AML?

Anti-Money Laundering (AML) refers to the laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. The property market is particularly vulnerable to money laundering due to the high values involved and the potential for complex ownership structures.

Key Legislation

Money Laundering Regulations 2017 (as amended)
Proceeds of Crime Act 2002
Terrorism Act 2000
Criminal Finances Act 2017

Your Legal Requirements

As an estate agent, you are legally required to:

Register with HMRC

All estate agents must register with HMRC for AML supervision before conducting any business.

Conduct Due Diligence

Verify the identity of all sellers and understand the nature of their business relationships.

Risk Assessment

Maintain written risk assessments of your exposure to money laundering.

Staff Training

Ensure all relevant staff receive appropriate AML training.

Keep Records

Maintain records of all verification checks for at least 5 years.

Report Suspicions

Report any suspicious activity to the National Crime Agency (NCA).

Customer Due Diligence (CDD)

Customer Due Diligence is the cornerstone of AML compliance. You must verify the identity of your customers and understand their circumstances.

Standard Due Diligence

For all property sellers, you must:

Verify Identity - Obtain and verify photo ID (passport or driving licence)
Verify Address - Confirm current address with recent utility bills or bank statements
Establish Ownership - Confirm the seller's legal right to sell the property
Source of Funds - Understand where the money for the property came from

Enhanced Due Diligence (EDD)

Additional checks are required for higher-risk situations:

Politically Exposed Persons (PEPs)
Complex ownership structures
Non-UK residents
High-value transactions (typically over £10,000)
Unusual transaction patterns

⚠️ Important

You cannot proceed with a property transaction until CDD is complete. If you cannot complete CDD, you must not establish a business relationship or carry out the transaction.

Red Flags to Watch For

Be alert to these warning signs that may indicate money laundering:

Transaction Red Flags

Cash purchases or large cash deposits
Property sold significantly below market value
Rapid buying and selling (property flipping)
Last-minute changes to payment methods
Funds from high-risk jurisdictions

Customer Red Flags

Reluctance to provide ID or information
Use of multiple names or aliases
Involvement of unexplained third parties
Unclear source of wealth
Overly secretive or evasive behavior

Documentation Red Flags

Forged or suspicious documents
Inconsistent information across documents
Documents from unreliable sources
Photocopies when originals are expected
Missing or incomplete documentation

Record Keeping Requirements

Proper record keeping is essential for AML compliance and protecting your business.

What to Keep

Copies of all ID documents
Proof of address documents
Details of all CDD measures taken
Records of any suspicious activity reports
Risk assessments and policies
Training records

How Long to Keep Records

5 Years - From the end of the business relationship or completion of the transaction

Note: Some records may need to be kept longer for other regulatory purposes

Data Protection

Remember that AML records contain personal data and must be:

Stored securely
Access controlled
Compliant with GDPR
Disposed of securely after the retention period

Reporting Suspicious Activity

If you suspect money laundering, you have a legal obligation to report it.

Making a Suspicious Activity Report (SAR)

Appoint a Nominated Officer - This person handles all SARs for your business
Submit Online - Use the NCA's online SAR system
Include All Details - Provide comprehensive information about the suspicion
Wait for Consent - Do not proceed with the transaction until you receive consent

⚠️ Tipping Off

It is a criminal offence to tell anyone (including the customer) that a SAR has been made or that an investigation is underway. The penalty can be up to 5 years in prison.

Penalties for Non-Compliance

Failure to comply with AML regulations can result in severe consequences:

Criminal Penalties

Up to 14 years imprisonment for money laundering
Up to 5 years for tipping off
Up to 2 years for failure to disclose

Civil Penalties

Fines up to £250,000 or twice the benefit gained
Public censure
Prohibition from operating

Business Impact

Reputational damage
Loss of professional licenses
Increased regulatory scrutiny

Best Practices for AML Compliance

1. Develop Clear Policies

Create written AML policies and procedures that all staff can follow.

2. Regular Training

Provide ongoing AML training to all staff, not just at induction.

3. Use Technology

Implement digital solutions to streamline compliance and reduce human error.

4. Regular Reviews

Review and update your risk assessments and procedures annually.

5. Foster a Compliance Culture

Make AML compliance part of your company culture, not just a box-ticking exercise.

6. Document Everything

Keep detailed records of all decisions and actions taken.

How Validiti Helps You Stay Compliant

Validiti is designed specifically for UK estate agents to simplify AML compliance while ensuring you meet all regulatory requirements.

Automated Verification

Digital ID verification powered by leading providers ensures accurate and efficient customer identification.

Mobile-First Experience

Sellers can complete verification from their smartphones, reducing drop-offs and speeding up the process.

Secure Document Storage

All documents are encrypted and stored securely for the required 5-year period.

Compliance Dashboard

Track the status of all verifications in real-time with our intuitive dashboard.

Automated Reports

Generate compliance reports instantly for audits or regulatory reviews.

Multi-Branch Support

Manage compliance across multiple offices from a single platform.

Ready to Simplify Your AML Compliance?

Join forward-thinking estate agents who are using Validiti to protect their business while providing a better customer experience.

Register Your Interest