A review of the anti-money laundering (AML) and counter-terrorist financing (AMLCFT) regulatory and supervisory regime was published in 2022 with the Financial Action Task Force (the global AML watchdog) discovering the need to tighten AML supervision. Four new supervision models were proposed, and all have potential implications for sales and letting agents, property auctioneers and high-value dealers across the UK.
The OPBAS+ model of supervision, coupled with sector-specific guidance and improved cooperation across sectors, is the most effective way to reduce fraudulent activity whilst ensuring businesses take appropriate measures.
We have also reiterated the issues with pooled client accounts caused by heavy-handed anti-money laundering de-risking at high street banks.
What is OPBAS+
Propertymark has long argued for the consolidation of supervision, whilst promoting the role of professional bodies as supervisors because they understand the sectors they work in and can gather information about developing risks. To this end, OPBAS could play a greater role in facilitating and reporting on the exchange of information between supervisors within and across different sectors.
Under the proposals, the powers of OPBAS would be strengthened, with the ambition of driving further improvements in the effectiveness of PBS supervision. The 22 Professional Body Supervisors (PBSs) would continue to supervise legal and accountancy sector firms for AML/CTF purposes. There would be no change to the remit of the existing statutory supervisors including HMRC.
Professional bodies reduce unintended harm
For several years banks have been withdrawing access to pooled client accounts, sometimes called undesignated client accounts, because they perceive them as a risk to their compliance with Anti-Money Laundering Regulations. However, this is based on a lack of understanding of how the current client money protection and anti-money laundering regulations apply to letting agents.
This illustrates why professional bodies have a vital role to play in AMLCFT. Propertymark has worked closely with HMRC to communicate the impact on property agents, and to share legislative updates and sector insights. We believe that continuing and enhancing these relationships will strengthen the effectiveness of the supervisory regime.
Sector-specific guidance
Propertymark would to see sector-specific guidance for property agents to ensure AML activities are as valuable as possible in preventing criminal activity. A simplified route for property agents to make a SAR would be a huge benefit, this will also support agents to make high-quality reports that are of optimum use to investigators and police.
Effective enforcement and fines
Fundamental to any effective supervision regime is enforcement and reporting to act as a greater deterrent against money laundering and criminal activity. Propertymark agrees with the HM Treasury assessment that fines issued by PBSs are too low and inconsistently applied. We urge HMRC and other supervisory bodies to publish details of fines and enforcement activity as a stronger deterrent against failing to meet AMLCTF obligations.
We also continue to call for important datasets such as Politically Exposed Persons and the Register of Overseas Entities to be easily accessible and with live updates, and for a change in regulations to allow agents to legally rely on verification of beneficial owners on the Register of Overseas Entities as part of their Customer Due Diligence.
Member compliance
Propertymark produces a range of resources, including training, factsheets, and how-to guides to support members with anti-money laundering compliance. Our Calm About Compliance service offers further reassurance with experienced agency auditors available to advise which will help avoid pitfalls that can lead to enforcement action.
Anti-money laundering (AML) training and resources
We have created a number of resources, forms and training options for agents and auctioneers to comply with their Anti-Money Laundering obligations.
Propertymark acknowledges that there are some key areas for improvement for the current AML Supervisory Regime. However, many of the proposals suggested could risk the regime losing much of its prior experience and the sector-specific expertise which has worked very well in the past.
The shortcomings of the existing system relate to a lack of coordination between sectors, which has played a part in current issues surrounding the closure of undesignated client accounts. We hope that a stronger OPBAS will be able to enforce more effective cross-sector coordination, ensuring that one sector's response to AML does not impact another sector.
