Central and North West London agent, Sandfords, are urging the NAEA to lobby the government immediately in order to bring about a fundamental change in the current anti-money laundering legislation, with regards to sub agent due diligence, which will support London agents in their everyday business.
HM Revenue and Customs (HMRC) took over supervision of the estate agency business last year and have since published guidance on how to stay on the right side of money laundering regulations. According to Andrew Ellinas, Director of Sandfords, there is actually a lack of understanding from HMRC as well as the government about the way in which the London market works.
He says: The current legislation doesn’t allow for agents in London to carry out their daily working routine and the NAEA need to speak up and apply pressure on the government before agents are heavily penalised for simply doing their job. We understand what is required of us and of our responsibilities, but there is an issue when it comes to sub agent due diligence, checking vendors are who they say they are. In London we work closely with other agents.
One agent might find a buyer for a property marketed by another agent. If agreed, they can sell the property for a percentage of the commission fee. As it currently stands, not only would the principal agent have to undertake due diligence against the vendor but also the sub agent, which is near on impossible.”
The legislation states that an agent must undertake customer (vendor) due diligence when establishing a business relationship.
“The principal agent begins a relationship with a vendor and so should indentify and verify their identity. The legislation needs to be changed by the government and enforced by HMRC to allow for this information to be passed on to the sub agent if sold via this method of business, rather than having to do it all again.” Says Andrew.
There are many agents and property professionals in support of Andrew’s view who also believe that this legislation has a loop hole.
Andrew concludes: “After attending NAEA master classes on this exact subject and speaking with industry experts, nobody has any clear view on how an agent is supposed to act, and the reason being is that HMRC don’t understand the intricacy of the London market. Agents work together and the government need to take this into account as the situation is currently unworkable. Agents will fall foul of the legislation when carrying out straight forward business and this is a huge issue. Whilst the industry appreciates that all agents need to take responsibility and know who they are working for, the NAEA need to be talking to government bodies to ensure agents are protected and aren’t getting fined for going about their normal business.”