Estate agents slacking when it comes to AML sanctions screening
SmartSearch's Collette Allen says new sanctions could swiftly convert low-risk, longstanding UK clients into high-risk entities overnight.
Estate agents are slacking when it comes to anti-money laundering (AML) screening with just one in four (24%) checking new customers against sanctions or Politically Exposed Person (PEP) lists – down from nearly four in 10 (37%) last year, AML firm SmartSearch reveals today.
Its latest research shows agents actions mirroring that of regulated firms – with only a quarter (25%) of those also doing the same compared to nearly three quarters (73%) the year before.
PARTICULARLY ALARMING
Martin Cheek, Managing Director of SmartSearch, says the ‘backslide’ is particularly alarming given the recent global geopolitical tensions between the West and China, echoing the lessons from last year’s sudden raft of sanctions against Russia.
He adds: “Sanctions are not a static list, they are a dynamic and rapidly evolving tool of foreign policy. Firms that think occasional checks are sufficient are not just naïve, they’re risking severe penalties, including substantial fines.
“Under the Economic Crime Act, breaches of financial sanctions are punishable by fines of up to £1 million – and let’s not forget the accompanying reputational damage. In this digital age, news travels fast, and being named and shamed for a sanctions breach can be devastating.”
OFF GUARD
Collette Allen (main picture), SmartSearch Chief Operating Officer, says: “The speed at which sanctions can be imposed can catch firms off guard. It is simply not enough to have screened a client ‘sometimes’ or ‘often’ and assume the job is done.”
And she adds: “This worrying trend is not just a regulatory concern it poses significant consequences for the fight against the criminal gangs that laundering their ‘dirty money’ in the UK.
Firms must revive their compliance processes.”
“The call to action is clear, firms must revive their compliance processes. The use of Electronic Verification (EV), recommended by the 2020 Money Laundering and Terrorist Finance Act is a step in the right direction. EV streamlines the verification process and provides a more reliable risk assessment.”
DECISION MAKERS
SmartSearch surveyed 500 compliance decision-makers across estate agents, mortgage brokers, financial services, accountancy and law firms and intermediaries.
The legal sector, which previously led with a robust four-fifths (84%) commitment to always performing checks, has now plummeted to just a quarter (24%) in 2023.
The financial services sector has also seen a stark decline, from almost two-thirds (66%) to just over a fifth (22%).
