OPINION: If ministers want agents to help with AML, government needs to act

The industry needs the government to standardise and direct tech usage if agents are to willingly help realise its AML enforcement aims.

aml technology

Estate agents face serious and increased risks from money laundering in the UK property market, HM Treasury warned last year, and yet adoption of AML tech to mitigate these risks is making slow progress.

That’s why we’re calling on the government to take greater action to encourage agents to embrace the tools that can help.

Barriers to adoption

Many agents face three main barriers to adopting tools that can automate and enhance ID and AML checks.

First, because the government and its regulators are not consistent in how they suggest firms use technology to tackle money laundering, many agents don’t act.

Second, as the government has not yet provided an incentive to adopt AML technology, agents continue with manual methods as they believe they are enough to avoid breaching regulations.

Third, the government has not provided agents with the clarity they need on which AML and ID tech providers meet the required regulatory standards.

Increased risk 

The failure to remove these barriers to adopting the right technology has several implications.

Most importantly, the risk of money laundering in the UK property market has increased.

The joint report from HM Treasury and the Home Office assessed the risk of money laundering in the property market as high, up from medium.

In addition, estate agents may face high-value and high-profile fines if they fall foul of their obligations. Such fines may push some firms out of business, jeopardise their international reputation and limit new business.

So, it’s in the interests of both agents and the government to tackle money laundering once and for all.

Digital tools

 To encourage the take-up of the right tools among agents, the government needs to take three steps.

First, we would like to see regulators harmonise their AML guidance and explain how tech can enhance ID and AML checks to ensure a more consistent approach.

The government’s UK digital identify and attributes trust framework, if successful, will go a long way to harmonising requirements. In turn, this should lead to synchronisation between regulatory guidance. But more should be done immediately.

Second, HM Land Registry’s (HMLR) Digital ID Standard combined with a Safe Harbour for firms that use relevant e-ID technology has helped increase the take-up of digital ID technology in conveyancing.

In doing so, HMLR’s approach will help cut fraud risk and save conveyancers and their clients valuable time and money. Regulators responsible for AML supervision for estate agents should adopt a similar approach.

Lastly, the government should publish a list of criteria that e-ID and AML must meet. As a start, all providers should be FCA regulated and use Open Banking, AI, facial biometric and cryptographic technology to conduct AML checks.

In taking these steps, the government will help property professionals to adopt the right tools to tackle AML. In doing so, it will reduce the risk of money laundering in the property market.

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