11. Money Laundering

Question 1

What is money laundering?

Answer 1

The process by which the proceeds of crime are converted into assets that appear to have a legitimate origin

Question 2

What legislation covers money laundering in the UK?

Answer 2

Money Laundering Regulations 2007

Question 3

Who does the current money laundering legislation apply to?

Answer 3

Apply to anybody in the ‘regulated sector’ (includes estate agents and High Value Dealers)

NB: High Value Dealers are those that receive payments of €10,000 or more in cash in exchange for goods (not services)

Question 4

What are the requirements under the current money laundering legislation?

Answer 4

Regulated firms must:

1. Register with HMRC
2. Carry out customer due diligence measures to check customers are who they say they are
3. Keep records of customer due diligence checks and financial transactions
4. Put systems in place to avoid money laundering
5. Appoint a ‘nominated officer’ who is responsible for reporting suspicious activity to the National Crime Agency (NCA) under the Proceeds of Crime Act 2002

Question 5

What may still be required for individuals/firms that are not governed by the current money laundering legislation?

Answer 5

Firms that are not within the regulated sector may also need to submit a Suspicious Activity Report (SAR) to the NCA if they have knowledge or suspicion of money laundering activities

NB: failing to do so is an offence

Question 6

What legislation governs the reporting of suspicious activity?

Answer 6

1. The Proceeds of Crime Act 2002
2. The Terrorism Act 2000 (all individuals and companies must report terrorist financing where suspected/known)

Question 7

What are some typical indicators of money laundering?

Answer 7

1. Large payments made in cash
2. Party is being overly secretive or evasive
3. Source of funds is not known or questionable
4. Party refuses to provide information, data or documents usually required to enable transactions

Question 8

What can you and your firm do to prevent fraud?

Answer 8

1. Set up a fraud response plan, outlining procedures for detection, investigation, prevention of further loss, securing evidence, recovery and reporting
2. Never hand out confidential information to any unsolicited phone calls, texts or emails

Question 9

What should you do if you know of or suspect fraud?

Answer 9

Report it to Action Fraud

Question 10

A client gives you money to cover planning and building regulations applications for a project - what should you do with it?

Answer 10

Set up a clients’ holding account in accordance with the RICS requirements

Question 11

A client gives you a large sum of cash to pay for a builder whilst he is out of the country - what would you do?

Answer 11

1. Question why cash is being used
2. If circumstances are not deemed to be suspicious, set up a client holding account in accordance with the RICS’ obligations
3. If circumstances are deemed to be suspicious, report to the National Crime Agency (NCA)

Question 12

What guidance does RICS provide?

Answer 12

Countering Bribery

and Corruption,

Money Laundering and

Terrorist financing

Feb 2019