IDV checks are continuing to outstrip PEPs and Sanctions checks, despite the HMRC guidance for estate agents to meet their regulatory obligations, according to the latest findings from Credas Technologies.
The research reveals that more than 2.2 million IDV checks were completed on the Credas AML and Identify Verification (IDV) platform in 2023, compared with just 1 million PEPs and Sanctions checks. On average, for every two IDV checks, there is one PEPs and Sanctions check on the Credas platform.
Under UK Law, estate agents are required to carry out AML checks in line with regulations and guidance set out by HMRC. These checks include identifying the source of funds used to purchase a property and conducting identity checks on their customers. If an estate agent is suspicious that their client is attempting to launder illicit funds, they must report this to the National Crime Agency.
Estate agents also need to be aware of any PEPs and persons/entities where the UK government has imposed sanctions, in all transactions. Not only do they pose a higher risk they also require close monitoring and enhanced due diligence.
According to Credas Technologies, the amount of illicit funds laundered through the UK is estimated to be at least £88bn. Tim Barnett, CEO of Credas Technologies comments: “Our research clearly shows that there is significant complacency towards PEPs and sanctions checks amongst estate agents and compliance is too low.
“The property sector has often been the target of money laundering both to layer and integrate illicit funds. However, the frantic speed at which the market is moving and the strain it has placed on the property industry has made it more attractive to criminals looking to take advantage of over-worked property professionals.
“Estate agents can play a vital part in preventing money laundering by conducting thorough due diligence to both deter and identify suspicious activity. Both buyers and sellers can be involved in money laundering as a means of integrating and layering funds.
The UK government publishes the UK Sanctions List, which provides details of those persons and entities where the UK government has imposed sanctions in accordance with the UN’s designations, as well as unilaterally. In December 2023, there was a surge of 113 new designations on The UK Sanctions List, compared to a total of 800 designations in the 2022-23 financial year.
Tim Barnett, CEO of Credas Technologies commented: “Firms have different options when it comes to performing PEPs and sanctions checks, they can do it manually by checking the latest HM treasury list, conducting their own research through Google, or using local knowledge.
“These are all valid methods but are time-consuming and hard to prove when audited. Digital checks are low-cost, efficient, and help ensure a consistent approach. Law and conveyancing firms also need to consider relatives and close associates (RCAs) which are harder to identify through traditional manual checks.
“To help estate agents meet their money laundering obligations, we have just launched Credas+, a new managed compliance service which removes the burden of having to manually remediate AML results.
“The new service offers a single comprehensive solution that delivers a pass or fail result, together with comprehensive compliance reports, including all the remediation evidence.
“We have made a significant investment in our new Credas+ service, which combines managed outsource compliance for PEPs, Sanctions & IDV. Estate agents will be able to reduce both their workload and the administrative burden of compliance.
“We are a leading provider of digital compliance solutions and have processed 2.3 million people through our platform in the last 12 months alone. That’s about 1 in 20 adults in the UK aged 18-65 in just a year.”
