Legislation

Question 1

What is the Estate Agents Act 1979?

Answer 1

Aimed at agents buying and selling property under section 1 of the act

Question 2

What are the principles of the Estate Agents Act 1979?

Answer 2

1. Honesty and Accuracy
2. Clarity on ToE
3. Open and Transparent
4. No Discrimination
5. Pass on all offers to client in writing
6. Clients money in a separate account

Question 3

What is section 18 about?

Answer 3

Requires agents to agree terms of engagement with their client before entering into a business relationship. Must agree basis of agency, fee and when the fee will be payable and other services being offered.

Question 4

What is section 21 about?

Answer 4

Requires agents or an anyone connected to the agent to declare their interest in a property before entering into negotiations with anyone interested in purchasing or selling the property.

Question 5

What are the penalties for breaching the Estate Agents Act 1979?

Answer 5

Warning Order - First offence
Prohibition Order - Repeated offence or serious offence which will ban the individual from agency activities.

Failure to comply with a prohibition order is a criminal offence.

Question 6

What are the Money Laundering Regulations 2019?

Answer 6

Aimed at firms regulated by HMRC and firms offering estate agency services must ensure they register with HMRC before they can operate.

Question 7

What is the aim of the Money Laundering Regulations?

Answer 7

To enhance transparency and to ensure firms have preventative provisions in place to prevent money laundering from happening in the property industry.

Question 8

What are the four things must firms do to comply with Money Laundering Regulations?

Answer 8

1. Undertake due dilligence (enhanced or simplified)
2. To undertake a risk assessment based approach to identify money laundering.
3. Have a dedicated money laundering officer
4. Ensure staff are trained on money laundering regulations and are aware of the firms money laundering policies.

Question 9

What is simplified due diligence?

Answer 9

Undertake 2x identification checks on both the buyer and seller or if either party is a company then verify details with companies house (company number and registered address).

Question 10

What is enhanced due diligence?

Answer 10

Where you will need to confirm the reason for the transaction, the wealth of the buyer / seller and the source of funds. Firms will also need to undertake regular monitoring of the client.

Question 11

When would you undertake enhanced due diligence?

Answer 11

1. Complex company structure
2. High risk third country
3. Politically exposed person

Question 12

What is the risk based approach to money laundering?

Answer 12

Where firms undertake a risk assessment to identify their risks to money laundering and how they will minimise the identified risks.

Question 13

How would you undertake a risk assessment to money laundering?

Answer 13

The risk assessment should be in proportion with the firms geographical location, services being offered and the clients it deals with.

Example offering multiple services and operating in multiple countries, including high risk third countries will be considered a high risk and therefore should have policies and procedures in place to manage that risk.

Question 14

What are the fines if found guilty of the money laundering regulations?

Answer 14

1. Business fail to comply with regs - unlimited fine and/or 2 year imprisonment.
2. Found guilty of money laundering - Unlimited fine and / or 14 years in prison
3. If found tipping someone off about an investigation - up to 5 years in prison