property.
data.
network.
antI-Money LaUnderInG
FaQs For eState aGentS
1
Contents
1.
General
1.1
1.2
1.3
1.4
1.5
1.6
1.7
What is the purpose of the Money Laundering Regulations 2007 (“MLR”)?
What is customer due diligence (“CDD”)?
Whatisabeneficialowner?
What are Senior Managers’ responsibilities?
What are the consequences of not carrying out CDD?
What is a risk based approach?
Whataresomewarningsignsofsuspiciousactivity?
2.
estate aGents
2 .1
2.2
2.3
2.4
2.5
2.6
WhyareestateagentsrequiredtocomplywiththeMoneyLaunderingRegulations2007?
Who should an estate agent (principal and sub-agents) carry out CDD on?
What information and documentation should an estate agent obtain?
When should an estate agent (principal and sub-agents) carry out CDD?
Isaprincipalagentpermittedtoprovidetheseller’sname,addressanddateofbirthtoasub-agent
or are there data protection considerations?
Who should estate agents not accept as customers?
3.
the eU FoUrth Money laUnderinG directive
3.1 W
hatistheEUFourthMoneyLaunderingDirective(“4thMLD”)andhowwillitchangethecurrent
position?
3.2 WhenwilltheFourthMoneyLaunderingDirectivecomeintoeffectintheUK?
4.
4 .1
4.2
4.3
4.4
4.5
Proceeds oF criMe act 2002 (“Poca”)
Whataretheprincipalmoneylaunderingoffences?
WhatreportingobligationsdoestateagentshaveunderPOCA?
HowshouldaSARbemade?
Whatis“tippingoff”andwhydoestateagentshavetobeconcernedaboutit?
Acustomerorprincipalagentmaybecomeconcernedifasub-agentstartstoasktoomany
questionsregardingtheidentityofasellerandthesourceoffunds.Wouldrefusingtoproceedwith
thetransactionuntilthisinformationhasbeenobtainedconstitutea“tippingoff”offence?
4.6 Whatstepscanestateagentstaketoavoid“tippingoff”?
4.7 CananestateagentbeheldliableiftheysubmitaSARandapotentialcustomerlosesasaleor
opportunity to purchase a property?
5.
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7
7
8
10
10
11
11
12
12
12
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13
13
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MiscellaneoUs
5.1 W
hatarethetaximplicationsifanagentisshownacopyoftrustdeedsintheUKoftheownerofan
offshoretrust?
5.2 Istheofferingofcommissionbyaprincipalagenttoasub-agentabreachoftheMLR?
2
4
4
4
5
5
5
5
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ThisFAQhasbeencreatedtoprovideguidancetocompanieswhich
subscribetotheLonResnetwork.
Thisdocumentcontainsourhighlevelopinioninrespectofantimoney laundering obligations imposed upon estate agents by the
MoneyLaunderingRegulations2007andotherrelevantlegislation.
This note is not intended to be an absolute statement of the legal
positionwhichmayapplyinagivensituation.Whereaspecificset
ofcircumstancesarise,legaladviceshouldbeobtained.
3
1.General
1.1 What is the purpose of the Money laundering regulations 2007 (“Mlr”)?
heMLRsetoutwhatrelevantbusinesses,suchasestateagents,mustdotopreventtheirservicesfrombeingusedfor
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moneylaunderingorterroristfinancingpurposes.
TheMLRcameintoeffecton15December2007andhavesubsequentlybeenamended.
1.2 What is customer due diligence (“cdd”)?
Regulation5MLRdefinesCDDas:
• identifyingthecustomerandverifyingthecustomer’sidentityonthebasisofdocuments,dataorinformation;
• identifyinganybeneficialownerandtakingadequatemeasures,onarisksensitivebasis,toverifytheidentityofany
beneficialowner;and
• obtaining information on the purpose of a business relationship.
DDmustbeappliedwhenarelevantbusinessestablishesabusinessrelationship,carriesoutanoccasionaltransaction,
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suspectsmoneylaunderingorterroristfinancingand/ordoubtstheveracityofdocuments/informationpreviouslyobtained.
Theidentityofthecustomermustbeverifiedpriortoanoccasionaltransactionbeingcarriedoutorbeforetheestablishment
ofabusinessrelationship.However,CDDcanbecarriedoutduringtheestablishmentofabusinessrelationshipifthisis
necessaryinordertonotinterruptnormalcourseofbusinessandthereislittleriskofmoneylaundering/terroristfinancing.
ThelevelofCDDtobecarriedoutshouldbedeterminedbyeachbusiness,usingariskbasedapproach.
1.3 Whatisabeneficialowner?
Regulation6,MLRdefinesabeneficialowneras:
• inthecaseofabodycorporate/partnership–anyindividualwhoowns/controlsmorethan25%ofthesharesorvoting
rights/capitalorprofits,and/oranyindividualwhoexercisescontrolovermanagement;
• inthecaseofatrust–anyindividualwhoisentitledtoaspecifiedinterestinatleast25%ofthecapital,thepersons
whosemaininterestthetrustissetupandanyindividualwhohascontroloverthetrust;
• inthecaseofanestateofadeceasedperson–theexecutororadministrator;and
• inanyothercase,theindividualwhoultimatelyownsorcontrolsthecustomeroronwhosebehalfatransactionis
being conducted.
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1.4 What are senior Managers’ responsibilities?
eniormanagementisresponsibleforensuringthattheirfirmhasappropriateprocessesandproceduresinplacetoreducethe
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riskofbeingusedforthepurposeofmoneylaunderingandforensuringthattherequirementsoftheMLRarecompliedwith.
Seniormanagersincludethefollowingroles:
• director;
• seniormanager;
• companysecretary;
• chiefexecutive;
• memberofthemanagementcommitteeorsomeonewhocarriesoutthosefunctions;and
• any partner in a partnership or a sole proprietor.
• P
oliciesandproceduresshouldaddressthelevelofriskabusinessmayencounterindifferentcircumstancesand,whenhigh
risksareidentified,seniormanagersmusttakeextrameasuresandconsiderwhethertoreportsuspiciousactivity.
1.5 What are the consequences of not carrying out cdd?
reachingvariousrequirementsoftheMLRisacriminaloffencewhichcanresultinunlimitedfinesforcompaniesandfinesand/or
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atermofimprisonmentofuptotwoyears.
CompaniessubjecttotheMLRcanalsobeimposedwithcivilfinancialpenaltiesforbreachesoftheMLR.
1.6 What is a risk based approach?
riskbasedapproachassessestherisksthatabusinessmaybeusedformoneylaunderingorterroristfinancing,andputsin
A
place appropriate measures to reduce and manage those risks. Such measures should take the form of policies and procedures
whicharecommunicatedtoallstaff.
heapproachtakenbybusinessestotheriskofmoneylaunderingwillvaryacrosseachfirm,astherisksfacedbyeachfirmare
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likelytovarydependingonthecustomerstheyhave,thelocationtheyoperateinandthevalueoftransactionstheyare
undertaking.
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1.7 Whataresomewarningsignsofsuspiciousactivity?
Newcustomers
• checkingthecustomer’sidentityisdifficult;
• thecustomerisreluctanttoprovidedetailsoftheiridentityorprovidesfakedocuments;
• n
oapparentreasonforusingabusiness’sservices-forexample,anotherbusinessisbetterplacedtohandlethesizeofthe
transactionorthelocationoftheproperty;
• partorfullsettlementincashorforeigncurrency,withaninadequatereasonforthisprovided;and
• thepropertyvaluedoesnotfitthecustomer’sprofile.
regular and existing customers
• thetransactionisdifferentfromthenormalbusinessofthecustomer;
• thesizeandfrequencyofthetransactionisdifferentfromthecustomer’snormalpattern;
• thepatternhaschangedsincethebusinessrelationshipwasestablished;
• therehasbeenasignificantorunexpectedimprovementinthecustomer’sfinancialposition;and
• thecustomercannotgiveaproperexplanationoffromthesourceoftheirfunds.
transactions
• apropertyhasmultipleownersorisownedbynomineecompanies;
• thesalepriceissignificantlyaboveorbelowmarketvalue;
• unusualrequeststoexpeditetransactionsunnecessarily;
• asuddenorunexplainedchangeinownership;
• athirdparty,apparentlyunconnectedwiththecustomer,bearsthecosts,settlesinvoicesorotherwisepaysthetransactioncosts;
• u
nusualinvolvementofthirdparties,cashgifts,orlargepaymentsfromprivatefunds,particularlywherethebuyerappearsto
havealowincome;
• beingaskedtoholdabigsuminaclientaccount,thenrefundittothesameoradifferentaccount;
• proceedsofasaleorrentalsenttoahighriskjurisdictionorunknownthirdparty;
• unusualsourceoffunds,forexamplecomplexloansorunexplainedcharges;and
• theowner,landlordorbuilderisnotcomplyingfullywiththeirlegalobligations,perhapstosavemoney.
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2. estate agents
2.1 WhyareestateagentsrequiredtocomplywiththeMoneyLaunderingRegulations2007?
Estateagentsaredefinedas“relevantpersons”undertheMLRandthereforemustcomply.
F orthepurposesoftheMLR,HMRCisthesupervisorybodyforestateagents.Allestateagentsshould,therefore,beregistered
withHMRC.
EstateagentscanregisterbycompletinganMLR100formwhichcanbefoundonHMRC’swebsite.
2.2 Who should an estate agent (principal and sub-agents) carry out cdd on?
AllestateagentsmustcarryoutCDDontheircustomersandthebeneficialownersoftheircustomers.
hereanestateagentisactingasaprincipalagenttheseller/purchaseristhecustomerandshouldbesubjecttoCDD
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(identificationandverification).Ifthecustomerisacorporateentity/partnership/trustthenitwillalsobenecessarytoidentify
thecustomer’sbeneficialowners.
hereanestateagentisactingasasub-agent,the“customer”istheprincipalestateagentand,therefore,allsub-agents
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shouldcarryoutCDDontheprincipalagentsthattheyworkwith.Thiswillincludeverifyingtheidentityofthecompanyand
identifyingitsbeneficialowners,whichwillincludeshareholderswhoown25%ormoreoftheshareholdinginthecompany.
Inthecaseofasub-agent,theseller(whoisthecustomeroftheprincipalagent)isalsodeemedtobeabeneficialownerofthe
principalagent.Thisisbecausetheselleristheindividualwhoultimatelycontrolsthecustomerand/oronwhosebehalfa
transactionisbeingconducted.Assuch,allsub-agentsshouldtakestepstoidentifytheunderlyingseller/purchaser.Please
seequestion2.4below.
Ifasub-agenthascontactwiththeprincipalagent’scustomer,thesub-agentmayneedtotreatthesellerorpurchaserasa
customer,ratherthanabeneficialowner.ThisisimportanttokeepinmindbecausetheMLRrequiresverificationofall
customers’identities,whilstverificationoftheidentityofbeneficialownersisdependentonanassessmentofthelevelofrisk.
2.3 What information and documentation should an estate agent obtain?
helevelofCDDwhichneedstobecarriedoutwilldependupontherisksinvolvedinanygiventransaction,Estateagents
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should,however,identifycustomersandverifytheiridentitiesusingindependent,reliablesources.
Identifyingprivateindividualsasacustomerorbeneficialowner
herethecustomerofanestateagentisaprivateindividual,theestateagentmustobtaintheindividual’sfullname,
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residential addresses and date of birth.
Ifthecustomer’sidentityistoverifiedbydocuments,originalsdocumentsshouldbeseenandphotocopiesshouldnotbe
accepted,unlessvalidatedasdescribedbelow.
7
Documentswhichshouldbeacceptedtoverifyanindividual’sidentityshouldbeagovernmentissueddocumentsuchas:
•
•
•
•
•
avalidpassport;
avalidphotocarddrivinglicence;
anationalidentitycard;
afirearmscertificate;or
anidentitycardissuedbytheElectoralOfficeforNorthernIreland.
herethecustomerdoesnothavephotoIDaseconddocumentshouldbeobtainedwhichdetailsthecustomer’snameand
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either their address or date of birth.
lternatively,iftheriskofaparticularbusinesspermittedit,electroniccheckscouldbecarriedoutinordertoverifyacustomer’s
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identity.Thereareanumberofsupplierswhocanprovideelectronicverification.WhereacustomerisnotaresidentoftheUKand
thereareconcernsinrelationtotheauthenticityoftheidentitydocument,therelevantembassyorconsulateshouldbecontacted
Ifdocumentsareinaforeignlanguage,theestateagentmustbesatisfiedthattheydoinfactprovideevidenceofthe
customer’s identity.
Identifyingorganisationsascustomersorasbeneficialowners
F orcorporatecustomers,partnerships,trusts,charitiesandsoletraders,identityinformationthatisrelevanttothatentitymustbe
obtained.ThenatureoftheCDDcarriedoutwilldependuponthetypeofcustomer.
stateagentsshouldobtainthefullnameofthecompany,companyregistrationnumber,registeredaddressandcountryof
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incorporation.
Forprivateorunlistedcompaniesthenamesofalldirectors(orequivalent)shouldalsobeobtained.
stateagentsmustverifytheidentityoftheorganisationthroughreliable,independentsourcesthatarerelevanttothattypeof
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entity.Forexample:
•
•
•
•
searchingarelevantcompanyregistry;
confirmingacompany’slistingonaregulatedmarket;or
obtainingacopyofthecompany’scertificateofincorporation.
Itwillalsobenecessarytoestablishthebeneficialownersofcustomerswhoareorganisations.Assuch,thenamesof
individualswhoownorcontrol25%ormoreofitssharesorvotingrightsmustbeobtained.Inthecaseofasub-agentitisalso
necessarytoidentifytheidentityoftheunderlyingseller/purchaser.
2.4 When should an estate agent (principal and sub-agents) carry out cdd?
stateagentsarerequiredtocarryoutCDDwhentheyestablishabusinessrelationship,carryoutoccasionaltransactions(worth
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€15,000ormore),suspectmoneylaunderingandwhentherearedoubtsaboutpreviouslyobtainedcustomeridentification
information.
Whereanestateagentactsasaprincipalagent,theymustcarryoutCDDontheircustomersatthepointwhichtheyareinstructed.
Inthecaseofsubagents,thepositionislessclear.Allsub-agentsarerequiredtocarryoutCDD(identifyandverifytheidentity)on
principalagentswhichtheyworkwithandthisshouldbedonepriortoenteringintoanagencyagreementandbeforethefirst
instructionisreceived.
8
sdetailedabove,sub-agentsarealsorequiredtocarryoutCDDinrespectofbeneficialownersoftheprincipalagent.
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Theymusttakestepstoidentifybeneficialowners,whichincludestheunderlyingseller.Whetherornottheidentityofthe
beneficialownersneedstobeverifiedisamatterforeachfirm,takingintoaccounttheriskassociatedwithanygiven
transaction.
ub-agents,whencarryingoutCDDontheprincipalagent,shouldalsoidentifyallshareholders/partnerswhoownor
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control25%ormoreoftheshareholding/votingrightsinthebusiness.
heunderlyingseller(i.e.thecustomeroftheprincipalagent)isabeneficialowneroftheprincipalagentandassuch,
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sub-agentswillhavetotakestepstoidentifytheseller.However,inouropinion,thereisanargumentthatCDDonthe
principalagent’scustomerneednotbecarriedoutuntilthereisanoffermadeandacceptedinrespectofaproperty.
Inouropinion,itisnotuntilanofferismadeandacceptedonapropertythatthesub-agententersintoanoccasional
transactionwhichinvolvestheunderlyingselleractingasabeneficialowneroftheprincipalagent.atthispointthe
requirementtocarryoutCDDonthesellerwouldarise.Assumingthatthereisnocontractualrelationshipordirect
communicationbetweenthesub-agentandtheunderlyingseller,merelyarrangingviewingsofapropertyisnotenough,inour
opinion,toconstituteanoccasionaltransactionoranon-goingbusinessrelationship.WenotethatHMRCmaytakeadifferent
viewtousinrespectofinterpretingthelegislation.ShouldanyagenthaveanyspecificconcernsraisedbyHMRCtheyshould
seeklegaladvice.
ealsonotethatregulation7(3)MLRstatesthatapersonsubjecttotheMLRmust:
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“determine the extent of CDD measures on a risk-sensitive basis depending on the type of customer, business relationship,
product or transaction and be able to demonstrate to [HMRC] that the extent of the measures is appropriate in view of the risk of
money laundering and terrorist financing.”
ItisimportanttonotethattheMLRwereimplementedinordertopreventmoneylaunderingandterroristfinancing.Inour
opinionthereis,generallyspeaking,nopotentialriskofmoneylaunderingorterroristfinancinguntilthereisatransaction
takingplacewhichinvolvesthepassingofmoneybetweenindividuals/entities.Again,arrangingaviewingofapropertyas
asub-agentdoesnotgenerallyinvolveariskofmoneylaundering.However,shouldasub-agenthaveanysuspicion
regardingapropertythenwewouldrecommendthatCDDontheunderlyingsellerisundertakenatamuchearlierstage.
nceanofferismadeandacceptedonaproperty,thesub-agentmustconductCDDonthesellerasabeneficialownerof
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theprincipalagentbyidentifyingtheunderlyingseller.Thismeansthattheyshouldatleastobtaintheirname,dateofbirth
andaddressandweunderstandthatsuchinformationwouldtypicallybeprovidedwithinamemorandumofsalewhich
theprincipalandsub-agentexchanges.Whethertheidentityoftheunderlyingsellerneedstobeverified,usingdocuments
orelectronicmeans,willdependontheriskassociatedwiththetransaction.
otwithstandingourcommentsabove,therequirementtocarryoutCDDisverymuchbasedonthelevelofriskassociated
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withanybusinessrelationshipandtransaction.Allestateagentsshouldconsidertheircustomerandtransactionprofilesin
ordertodeterminetheappropriatelevelofCDDwhichshouldbecarriedout.Thereisnoonesingleapproachwhichcan
beuniformlyappliedbyallestateagentsasthemeasurestakenbyeachfirmmustbedependentontherisksidentified.As
such,sub-agentsmaywishtoconsiderwhetheritispossibleforthemtoobtaintheinformationinrespectoftheunderlying
selleratanearlierstage,ifitiswarranted.
ngoingCDDshouldbecarriedoutonexistingcustomersdependingontherisksassessed.Therefore,sub-agentsshould
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ensurethattheCDDcarriedoutonprincipalagentsisregularlyreviewedandupdated.
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2.5 I saprincipalagentpermittedtoprovidetheseller’sname,addressanddateofbirthtoa
sub-agent or are there data protection considerations?
heprincipalestateagentisonlypermittedundertheDataProtectionAct1998(“DPA”)toprovidethispersonal
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informationtoasub-agentwherefairnotice(totheaffectedindividuals)issatisfiedandwherethereisalawfulreasonfor
thatprovisionofpersonaldatatoasub-agent.Absentthisthereisrisktotheprincipalagentunderthatlegislation.
stateagentswillbeconsideredtobe‘datacontrollers’inrespectofpersonalinformationtheyholdrelatingtotheseller
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forMLRCDDpurposes(e.g.names,addresses,datesofbirthetc.)becauseestateagentsprocessthisinformationfortheir
ownpurposes(i.e.tocomplywiththeirlegalobligations).
sdatacontrollers,estateagentsmustprovidefairnoticetotheaffectedindividuals(e.g.thehomeowner(s)/seller(s)of
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theproperty)beforeprovidingtheirpersonaldata(asabove)toasub-agent.Typically,thiswouldbeaddressedindata
privacynoticesonwebsitesand/orinhardcopyandsuppliedtothoseindividualswhentheyfirstsubmittheirpersonal
datatotheestateagent.Thesamepointappliestoanypersonaldataaboutofficersandshareholdersoftheestate
agentwhosepersonaldatamaybesharedwiththesub-agent
sdatacontrollers,estateagentsmustensurethatanydisclosuresofpersonalinformationaremade‘lawfully’in
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compliancewiththefirstprincipleoftheDPA.Themostrelevantlegaljustificationsthatestateagentsmayseektorely
ontodemonstratecompliancewiththisrequirementare:
• t hattherelevantdatasubject(s)hasconsentedtothedisclosureoftheirpersonaldataforthepurposesofassisting
sub-agentstocomplywiththeirMLRCDDobligations.Suchconsentmustbefreelygivenandbespecificand
informed.Ageneralconsentstatementintermsandconditionsisunlikelytobeconsideredvalid;and/or
• t hatthedisclosureisnecessaryforthelegitimateinterestsoftheestateagentandtherelevantsub-agent,except
wherethedisclosureisunwarrantedbecauseitisprejudicialtotheindividual.Adequatesafeguardsshouldbeputin
placetolimitdisproportionateprocessing(e.g.tolimitthevolumeofdatasharedtothatwhichisstrictlynecessary,
and to ensure the data is secure) and to minimise any undue impact on the data subject(s)
2.6 Who should estate agents not accept as customers?
stateagentsshouldnotdealwith,oracceptascustomers,personsorentitiesitcannotcarryoutCDDon,orifthe
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results of CDD are unsatisfactory.
F urthermore,ifanestateagentcannotcomplywithongoingCDD,itmustterminateanyexistingbusinessrelationship
withthecustomerandconsiderwhethertomakeasuspiciousactivityreport(“SAR”).
stateagentsmustnotdealwithpersonsorentitieswhicharesubjecttofinancialsanctionsimposedbyeitherthe
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UnitedNations,EuropeanunionortheUK.Assuch,allagentsshouldhaveinplace,procedurestoensurethatfundsare
notreceivedfrom,ormadeavailableto,anyindividualorentitywhichhasbeendesignatedpursuanttofinancial
sanctions.
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3. the eU Fourth Money
Laundering directive
3.1 W
hatistheEUFourthMoneyLaunderingDirective(“4thMLD”)andhowwillitchangethe
current position?
he4thMLDimplementsanumberofkeychanges,includingbringinglettingagentswithinscopeofanti-money
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laundering legislation.
hapter2ofthe4thMLDdealswithCDDandreiteratestheimportanceofidentification,theongoingscrutinyof
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transactionsandtherisksensitivenatureoftheCDDexercise.
rticle25ofthe4thMLDstatesthatmemberstatesmaypermit“obligedentities”,whichincludeestateagents,torelyon
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thirdparties(includingotherestateagents)tocarryoutCDD.Thiswillpermitsub-agentstorelyonprincipalagentsto
carryoutCDD,wheretheprincipalagentgivesconsenttobeingreliedupon.
rincipalagentswill,oncethechangescomeintoeffectintheUK,beabletocertifytosub-agentsthattheyhave
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conductedCDDontheunderlyingseller/purchaser.However,thesub-agentwillremainultimatelyliableforCDD
compliance.Itwillbeamatterforsub-agentstodeterminewhether,giventheCDDtheyhavecarriedoutontheprincipal
agentandtheirknowledgeofthetransactioninquestion,whetheritiscomfortableandconfidentinrelyingontheCDD
carriedoutbytheprincipalagentontheseller/purchaser.
3.2 WhenwilltheFourthMoneyLaunderingDirectivecomeintoeffectintheUK?
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llEUMemberStatesarerequiredtobringintoeffectdomesticlegislationtocomplywiththe4thMLDby26June2017.
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Theamendmentsdetailedat3.1abovewillnotcomeintoeffectuntiltheUKgovernmentlegislatesaccordingly.
4. proceeds of Crime
act 2002 (“poCa”)
4.1 Whataretheprincipalmoneylaunderingoffences?
Theprincipalmoneylaunderingoffencesinclude:
• concealing,convertingandtransferringcriminalproperty;
• e nteringinto,orbecomingconcernedin,anarrangementwhichapersonknowsorsuspectsfacilitatestheacquisition,
retention,useorcontrolofcriminalproperty;
• acquiring,usingandhavingpossessionofcriminalproperty;
• f ailingtodisclose(intheregulatedsector)whereapersonknowsorsuspects,orhasreasonablegroundsforknowingor
suspecting,thatanotherpersonisengagedinmoneylaundering;and
• tippingoff..
4.2 WhatreportingobligationsdoestateagentshaveunderPOCA?
Ifanyemployeeknows,suspects,orhasreasonablegroundsforknowingorsuspecting,thatanotherpersonisengagedin
moneylaunderingtheymustreportthisknowledgeorsuspiciontothenominatedofficerwithintheestateagent.Failureto
makesuchadisclosureisacriminaloffence.Estateagentsshould,therefore,haveproceduresinplaceforsuchreportingto
take place.
hereareportismadetoanominatedofficer,itisanoffenceforthatpersontofailtomakeanexternalSARtotheNational
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CrimeAgency(“NCA”)wheretheyknoworsuspect(orhavereasonablegroundsforknowingorsuspecting)thatanother
person is engaging in money laundering.
Theseobligationsonlyarisewhereinformationcomestoapersoninthecourseofbusiness.
4.3 HowshouldaSARbemade?
12
SAR’sshouldbesubmittedonlineatwww.nationalcrimeagency.gov.uk
4.4 Whatis“tippingoff”andwhydoestateagentshavetobeconcernedaboutit?
ippingoff(s.333APOCA)iswhereaperson(includinganyemployee)disclosestoanotherthateitheraninternalor
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externalSARhasbeenmadeorthataninvestigationinrespectofmoneylaunderingistakingplaceandthatdisclosureis
likelytoprejudiceaninvestigationthatmaytakeplace.
Tippingoffisacriminaloffencewithamaximumpenaltyof2yearsimprisonmentand/orafine.
4.5 a customer or principal agent may become concerned if a sub-agent starts to ask too many
questions regarding the identity of a seller and the source of funds. Would refusing to proceed
withthetransactionuntilthisinformationhasbeenobtainedconstitutea“tippingoff”
offence?
sub-agentmustbesatisfiedthatithasconductedadequateCDD.Inaddition,theoffenceoftippingoffisonly
A
committedinthecircumstancesdetailedat4.4.ThesecriteriaareunlikelytobemetinthesecircumstancesasaSARis
unlikelytohavebeensubmittedatthispoint.However,ifasub-agentisunabletosatisfactorilycompleteCDDona
customerorbeneficialowner,itshouldconsiderwhetheraSARshouldbesubmittedtotheNCA.
Whereanagenthasanyspecificconcernsregardingtippingoff,legaladviceshouldbesought.
4.6 Whatstepscanestateagentstaketoavoid“tippingoff”?
stateagentsshouldneverdisclosetheexistenceofaSARtoathirdpersoniftheyknoworsuspectthatthisdisclosureis
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likelytoprejudicetheinvestigation.
estpracticewouldbetoavoidcontactwiththesubjectoftheSARuntilconsentisreceivedfromeithertheinternal
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nominatedofficerortheNCA(ifanexternalSARhasbeensubmitted).Ifthisisnotpossible,estateagentsshouldact
normallywhilstnotactingonthecustomer’sbehalfuntiltheSAR
othinginPOCApreventsanestateagentfrommakingnormalenquiriesabouttheircustomersinordertodecide
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whethertoactforthiscustomer.TheseenquirieswouldonlyconstitutetippingoffifagentdisclosesthataSARhasbeen
made.
4.7 can an estate agent be held liable if they submit a sar and a potential customer loses a sale or
opportunity to purchase a property?
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ection338(4A)ofPOCAexplainsthat“whereanauthoriseddisclosureismadeingoodfaith,nocivilliabilityarisesin
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respectofthedisclosureonthepartofthepersonbyoronwhosebehalfismade”.ProvidedthattheSARissubmittedin
goodfaith,theestateagentwouldnotbeheldliableforanylossesincurredbyacustomerresultingfromtheSAR.
5. Miscellaneous
5.1 W
hatarethetaximplicationsifanagentisshownacopyoftrustdeedsintheUKoftheownerof
anoffshoretrust?
Itisunlikelythattaxissueswouldarisebymerelyshowingdocumentstoanagentprovidedthatthetaxplanningdidnot
requirethedocumentstostayoutsideoftheUK(e.g.forstampdutypurposes)andprovidedfurtherthattheagenthasno
furtherdutytoreportanyoffshoretruststoHMRC.
IfanindividualhasanyconcernsaboutbringingthedocumentsintotheUKand/orshowingthemtoagent,theyshould
seekadvicefromwhoeverputthetaxplanninginplace.
5.2 Istheofferingofcommissionbyaprincipalagenttoasub-agentabreachoftheMLR?
The MLR does not prohibit commission arrangements.
14
LInkS
HMRevenue&Customs
MoneyLaunderingRegulations:EstateAgencyBusinessregistration
www.gov.uk/guidance/registration-guide-for-estate-agency-businesses
MoneyLaunderingRegulations2007:SupervisionofEstateAgencyBusinesses
www.gov.uk/government/uploads/system/uploads/attachment_data/file/321830/MLR2007.pdf
MoneyLaunderingRegulations:Applicationforregistration(MLR100)
public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///
Applications/BusinessTax_iForms/1.0/MLR100&template=MLR100v5.xdp
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For further advice
lonres
37 Battersea Square, London SW11 3RA
William G Carrington
[email protected]
020 7924 6622 / 07711 168 783
eversheds
1 Wood St, London EC2V 7WS
Zia Ullah, Partner
[email protected]
0161 831 8454 / 07826 944 979
Victoria Turner, Associate
[email protected]
0161 831 8718 / 07867 155 047
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