Ethics - Money Laundering 1

Question 1

What is money laundering?

Answer 1

Money laundering is when proceeds of criminal activities are disguised or converted and then realised as legitimate assets

Question 2

What are the key provisions of the Money Laundering Regulations?

Answer 2

1. A requirement to have a written money laundering and terrorist financing risk assessment
2. Implement systems, policies and controls and procedures to address money laundering and terrorist financing risks and meet the requirements under the regulations
3. Adopt appropriate internal controls
4. Provide staff training
5. Comply with new customer, enhanced, and simplified due diligence requirements
6. Comply with the requirements relating to politically exposed persons (PEPs)
7. Ensure appropriate record keeping, policies and procedures
8. AML checks must be undertaken to confirm the identity of the proposed purchaser of a property and check the purchaser’s source of funds by the vendor’s agent before contracts are exchanged
9. To include additional high-risk factors when assessing the need for enhanced due diligence, and seek additional information and monitoring in certain cases, e.g. where there are transactions between parties based in high-risk third countries

Question 3

What are the legal obligations for estate agents?

Answer 3

• The regulations require letting agents to register with HMRC if they let individual properties for more than the equivalent of €10,000/month
• Government guidance ‘Estate agency business guidance for money laundering supervision’ was updated in June 2021 which also includes requirements for sales agents as well
• Individuals and businesses need to be approved and remain registered by HMRC in order to trade
• CDD checks on vendors, purchasers, landlords and tenants will have to be undertaken on new sales and any letting or reletting as above
• EDD checks will need to be undertaken if red flags occur (e.g. involving high risk countries or non face-to-face business relationships)
• Firms must have policies to identify and scrutinise transactions which are:
- Complex or unusually large, or
- contain unusual patterns of transactions, or
- are without apparent economic or legal purpose
• Firms must have group-wide procedures to share relevant information, and to train anyone capable of identifying or preventing money laundering or terrorist financing risks