Big rise in cash fines for agencies flouting AML regulations

There’s good news and bad news for letting agents on the anti-money laundering front.

The good news is that the overall number of anti-money laundering fines have declined by almost 19 per cent in the past year.

The bad news is that the sum of fines being issued to estate agents has increased by 980 per cent, totalling £772,618 in 2021/22. 

The UK government has made it a legal obligation for the business sectors defined by the Money Laundering Regulations - such as letting and sales agents, accountants, financial service businesses, and solicitors - to register for anti-money laundering supervision from HMRC, officially known as Economic Crime Supervision.

If a business covered by these regulations is deemed to have insufficient AML practices, monitoring, and precautions in place, HMRC is able to issue significant fines. 

The latest analysis of the data by Credas Technologies shows that the total sum of fines in the UK has fallen by 18.8 per cent annually, down from £3 million in 2020/21 to £2.5 million in 2021/22.

Despite this overall drop, two particular industries have seen enormous increases in fines: Accountancy Service Providers have seen fines increase by 1,083 per cent in the past year, while fines for Estate Agency Businesses have gone up by 980 per cent, reaching £772,618 in the last year.

Tim Barnett, chief executive of Credas Technologies, says: “At a glance, it may seem as though estate agency is very much the bad egg of AML compliance, with a huge annual increase in fines issued, surpassed only by accountancy service providers. However, this is perhaps a little unfair and there are a few factors that are important to consider here. 

“First of all, the property industry was not only locked down for a period of time due to Covid protocols, it then experienced an unprecedented period of boom which is yet to show any signs of slowing. With many firms also fighting tooth and nail to adapt to a changing landscape, there was always likely to be a period of adjustment and, when coupled with a far higher rate of output, an increase in AML compliance slip ups. 

“Secondly, estate agency has been leading the charge when it comes to the number of new businesses registering for AML compliance and so this will naturally lead to a greater level of fines when compared to other sectors. 

“Finally, when you compare the level of fines issued since the start of the pandemic versus the two years prior, the estate agency sector has actually seen a 41 per cent reduction. So while there may have been an annual spike as the industry has sprung back to life, the estate agency sector has actually seen a reduction in AML fines issued during the pandemic as a whole.”