HM Treasury has launched a consultation setting out four possible models for AML supervision with potential implications for sales and letting agents, property auctioneers and high-value dealers across the UK.

Propertymark is responding to the consultation to ensure that any reforms are adequate, work for its member agents on the ground and reduce economic crime in the property sector but is also calling on individuals to also respond to their voices and opinions.

The proposals are in line with the UK government’s commitment within the Economic Crime Plan 2023-2026 and they are now seeking views on the potential benefits and disbenefits of each option.

Currently, the AML/CTF supervisory system is made up of three statutory supervisors – the Financial Conduct Authority, the Gambling Commission and HMRC (who are responsible for supervising sales and letting agents, property auctioneers and high-value dealers) as well as 22 professional body supervisors (PBSs) who supervise the legal and accountancy sectors. These supervisors ensure firms and individuals comply with the Money Laundering Regulations (MLRs). They take enforcement actions if the MLRs are breached and ensure only fit and competent individuals hold management roles in regulated businesses.

In the most recent peer assessment by the Financial Action Task Force which is the global money laundering and terrorist financing watchdog, significant weaknesses and inconsistencies in the supervisory regime were identified which leave the UK vulnerable.

UK Government Proposals

• OPBAS+ – OPBAS’ powers would be strengthened, with the ambition of driving further improvements in the effectiveness of PBS supervision. The 22 PBSs would continue to supervise legal and accountancy sector firms for AML/CTF purposes. There would be no change to the remit of the existing statutory supervisors including HMRC.

• PBS Consolidation – have either two or six of the current 22 PBSs retain responsibility for AML/CTF supervision. Under two PBSs, there would be one PBS in the legal sector and one PBS in the accountancy sector with responsibility for AML/CTF supervision. Both of these organisations would have a UK-wide remit. However, they could have specialist divisions to account for differences in regime in Northern Ireland and Scotland as necessary. Under the proposals for six PBSs, there would be one PBS with responsibility for AML/CTF supervision for each of the accountancy and legal sectors in each of three jurisdictions: England and Wales, Scotland and Northern Ireland.

• Single Professional Services Supervisor – In the legal and accountancy sectors, all professional body supervisors would no longer be AML/CTF supervisors. One organisation (existing or new) would take responsibility for the AML/CTF supervision of all legal and accountancy sector firms. In addition to legal and accountancy sector firms, this organisation could potentially supervise Estate Agency Businesses and Letting Agency Businesses. Either HMRC could continue to supervise the remaining sectors it currently does, or these could also transfer to the Single Professional Services Supervisor.

• Single Anti Money Laundering Supervisor- All AML/CTF supervision would be done by one body, including the work currently done by the Financial Conduct Authority, the Gambling Commision, and HMRC, and the PBSs. There would be no other AML/ CTF supervisors. OPBAS would be wound up.

Agent compliance

It is an offence to trade as an estate agent unless registered with HMRC for AML supervision. The Fifth Money Laundering Directive expanded the scope of regulated businesses for AML supervision within the property sector to include the letting agency sector but only for high-value transactions with a monthly rent of EUR 10,000 or more.

The Directive also extended the rules to persons trading or acting as intermediaries in the trade of works of art, including when this is carried out by art galleries and auction houses, where the value of the transaction or a series of linked transactions amounts to EUR 10,000 or more.

Timothy Douglas, head of policy and campaigns at Propertymark, commented: “Propertymark has long argued for the consolidation of supervision, whilst promoting the role of professional bodies as supervisors because they understand the sectors they work in and can gather information about developing risks.

“To this end, the Office for Professional Body Anti-Money Laundering Supervision could play a greater role in facilitating and reporting on the exchange of information between supervisors within and across different sectors. However, fundamental to any effective supervision regime is enforcement and reporting to act as a greater deterrent against money laundering and criminal activity. We will be responding to this consultation to ensure that any reforms are adequate, work for our members and reduce economic crime in the property sector.”

The consultation closes on 30 September 2023 and can be found by clicking here.