EU anti-money laundering rules coming into place today will impact the UK property industry significantly, according to a partner at a legal and professional services firm.
HM Treasury says the new laws will make it more difficult for terrorists and criminals to move money through the UK financial system, with businesses such as banks and estate agents having to carry out ‘stringent and targeted checks’ to make sure that money changing hands is from a legitimate source and ‘will not be used to fund terror acts.’
Gordon Dadds partner Alex Ktorides says that this, combined with new investigative power being introduced by the Criminal Finance Act 2017 will lead to those in the property industry having to carry out further due diligence on buyers and sellers “which will slow down the buying process by up to 186 days.”
He says: “The Directive is a shake-up of the way that banks, estate agents and other parts of the regulated sector apply a risk based approach to customers. They will now have to consider the characteristics of the customer, the product and its distribution and the jurisdictions involved in determining the lengths that they have to now go to in terms of conducting due diligence on their clients. There is even a new requirement to force overseas branches of UK parent companies to apply UK standards. This will cause huge concerns to international businesses and even encourage moving head office from the UK. ”
Ktorides says the property sector now has to act quickly in order to ensure it complies with the Directive with the purchaser and the seller both now included in the application of customer due diligence, meaning additional checks will need to be carried out by estate agents, auctioneers and surveyors.
“This is going to create substantial challenges for the property sector especially given the final version of the directive has only been made public today which has left no time for banks, estate agents and the lending sectors among others to update their policies and processes alongside training staff on the new regime. Some agents have in excess of 100 branches and have received no prior time to implement the new processes in order to comply.
“For many smaller estate agents (and surveyors) this will be the first time they will have carried out checks on both the buyers and sellers and they are going to have to get up to speed with the regime as quickly as possible or risk facing an unannounced visit from the HM Treasury.”