Written by Malcolm Driscoll, Lead AML Consultant, FCS Compliance
I spend a good deal of my time helping agency clients in preparing for and giving support during, HMRC supervisory inspections.
Many of you will be aware that HMRC is stepping up the number of inspections it’s carrying out and we understand that for many of you it’s a stressful time.
We regularly work alongside HMRC and know what it takes to ensure you are in the best possible position to meet all money laundering regulation requirements, prevent offences of money laundering taking place and be ready for, and pass, an inspection.
The services we offer include carrying out Customer Due Diligence (CDD). The combined expertise of the FCS Compliance team ensures that our clients are in the safest of hands which we know gives them peace of mind. This is work that we carry out daily and extends to complex CDD issues where companies or trusts are involved.
As a reminder, the legislation surrounding CDD is very clear.
It must be undertaken:
- Prior to establishing a business relationship.
- For the seller this means prior to marketing and for the purchaser once the offer is accepted by the seller. The same is true for rentals over the €10,000 pcm threshold. In such cases CDD is carried out on both the landlords and tenant.
- For property finders, it’s at the time of signing terms of business with proof of funds added to this once a property is found.
- CDD must be carried out prior to undertaking any transaction.
- And importantly completed before exchange. Essentially, it is an ongoing process.
Recent HMRC public naming and shaming notifications have shown that in many cases, non-compliant agents have simply failed to adhere to the points I’ve outlined above.
It’s an all-too-common mistake and one that I have I seen myself, when working with agents during HMRC inspections. It’s something that we flag up in every training session we carry out and reiterate before HMRC turn up at agent’s offices. In some files that are inspected, it can be seen that no CDD has been done on the seller, not even a Land Registry check, until a buyer is found. This is a clear breach of the legislation and a dangerous practice. Not only do agents risk penalties imposed by HMRC but it opens the door to the potential for money laundering and reduces the time-frame to comfortably refer any suspicion of money laundering to the National Crime Agency and receive a response prior to exchange.
If you are unsure about when to carry out CDD or have any questions about your own AML requirements, we’re here to help.
Written: April 2024