There is no doubt that if the obligation to ID buyers is included in the new Money Laundering Regulations, it will create insurmountable problems for agents.
The claim comes from compliance expert and ex-Trading Standards officer David Beaumont.
He said: “The idea of checking the identity of buyers is basically a good one, but lawyers do it during the conveyancing process.
“To place a duty on agents to do it as well makes no sense.
“Where any statutory duty exists, control over compliance to that duty must be in the hands of the person with the duty. Agents have little or no control over buyers and so breaches of the duty will occur and the agent will be able to do nothing about it!
“Given that penalties are issued by HMRC for breaches, I find it hard to believe that there are no other voices putting forward the arguments against it?
“We have argued against this for a long time, because of the problems involved, whereas the professional bodies have been promoting it as best practice!
“It is not best practice and it should never have been considered as appropriate for inclusion in the new Regulations.
“The NAEA and RICS should have been fighting to ensure it was never considered as appropriate, but instead they were promoting its inclusion. They appear to have no understanding of the profession they represent, and the challenge for them will be to justify their stance.
“The logic is simple: currently, if a seller refuses to provide ID to their agent, the agent refuses to accept the instructions and does not market the property. No breach of the Regulations can therefore take place.
“If this proposal is implemented, what will an agent be able to do if a buyer refuses to provide ID? Nothing. This means the agent will be in breach of their statutory duty.”
This is only one of nine specific problems that Beaumont, of Compliance-Matters, a compliance consultant for agents, has identified.
If you want to see his views and his outline of all the problems click HERE
Beaumont also runs EYE’s free compliance helpline, exclusively for our subscribers. You can call it on 0161 727 0798.
It makes perfect sense. The agent usually sees, in person, both buyer and seller, often at the property. What better way to carry out ID checks etc. Conveyancers don’t always see their clients and rarely the property. Makes ID checks much more difficult.
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We have been asking for I.d for buyers and sellers for many years. We have only twice had a buyer query it and once we explained we had no problem. In my experience clients are used to it. We simply ask the buyers to pop in, they are usually excited about the house purchase and are happy to do so, we add the I.d to the aip or proof of funds, staple, pop on the file then issue memo of sale, job done, or have I missed something?!
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Yep is it genuine? Have you the ability to see a fraudulent document. Ask yourself …. what did you do with all those ID checks you took …. nothing!
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It does not make perfect sense, not one tiny bit. It is paper exercise and repeated at least three times by agent, lender and conveynacer. Once is enough? As to conveynacers never seeing their client …. LOL, LOL, LOL. That is the problem and not passing the buck to someone else. The NAEA and RICS are not fit for purpose, haven’t been for many years, so many an agents work very well without them. They are dinosaurs, stuck in the mud and not representative of the industry in the present century and have no pull, happy to go along to so called consulation meetings (when they are asked) so officials can say they were consulted. In your day you were good but that was 30 plus years ago and your lack of standing up and communication for the industry is noticebale by its abscene in the last decade and silent in recent months on many a subject. This story in particular raises the issue of your view and not that of your members or others at large.
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As letting agents we have been doing this for years cannot see the problem, as stated it would surely be rare that a selling agent didn’t meet the buyers face to face.
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unless you are an online agent????
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Lettings is exempt!
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Maybe exempt from this legislation, we have done as good practice, never had a landlord or tenant refuse to supply the requested info. We are however required to identify prospective tenants and establish their right to rent which involves about the same.
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Common sense should prevail A buyer seller landlord or tenant should only be required to provide ML details to one source involved in the transaction, i.e the agent, lawyer, or if involved, a lender. It’s nuts that all 3 need to carry out the procedure. And it does pi** off customers no end.
Very few object to it needing to be done. Many object to having to do it several times.
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David is of course quite correct. Whilst it rare for a committed applicant to refuse to provide identity, if they do you are in a difficult position as the Law states you must put forward all offers.
If the offer is accepted, they become ‘a buyer’ and you won’t have fulfilled your money laundering obligations. Oddly, I have on a few occasions had people being difficult telling me that their solicitor is happy with their identity and ‘what’s it got to do with you?’.
It’s also quite a challenge when dealing with a buying or relocation agent. No disrespect, but they aren’t keen on sharing too much information.
So, the question is, as you can’t refuse to pass on an offer, do you just report them so that you are covered and let the experts decide as that seems to be the only solution.
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So, the question is, as you can’t refuse to pass on an offer, do you just report them so that you are covered and let the experts decide as that seems to be the only solution.
That has been the position for many years!
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No business should put itself at risk from asking to do work it is not trained to do, does not have the expertise or the resources. One could say then they should use outside resources but that then is that what conveyancers could do? Fraud is very clever, in fact today it is often super intelligent and beyond the ability of the average neg. Conveyancers actually do the deal in their legal processing and that is where the buck should stop and they do it now anyway! RICS and NAEA have scored the biggest own goal in not helping to protect the industry. They have left agents wide open to loss of time, costs and prosecution.
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As a property search agent I only found out I needed to be registered under the MLRegs via a mail out from the RICS. RICS once I got through to their ‘customer care line’ could not expand on the yes or no in my situation but property buying agents are on the list of those caught by the proposed regs and Gov,UK confirms that ”…and relocation agency or property finder services”
I do not have a clients account as I do not handle clients money in any way shape or form.I am sure if someone wants to hoodwink me and pretend they are someone they are not it would be easy
This below is from the Law Society web site
”The draft Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations (the draft regulations) were published on 15 March. The draft regulations, which will transpose the EU’s Fourth Money Laundering Directive, are due to commence on 26 June.
The draft regulations will repeal and replace the Money Laundering Regulations 2007 (MLRs 2007) and will bring about some significant changes. Firms undertaking work in the regulated sector should ensure they are familiar with them prior to the commencement date.
It is important to note that the draft regulations have yet to be finalised and may be subject to change. Indeed, the Law Society and others have made strong representations to HM Treasury recommending amendments. ”
I recently was appointed by a New Zealand client to find an investment property on their behalf here in the South West. I obtained from them via email certified ( by their NZ solicitor) copies of their passports, utility bills and proof of funds. Their UK based solicitor also did the same. The regulations here surely need to establish the ONE person in the purchase/rental chain who is made responsible for this task and remove the duplication.
I recall the original CRB checks for people wanting to work with charities had originally to get repeated checks for each charity/organisation. That has now been removed and one CRB check covers you.
From a practical point of view if I use the example of an applicant registered with various estate agents – hight street and on line. They may be looking at various properties to buy or lease, may negotiate on one, two or more as often happens. Multi duplicity has to take place as all agents involved carrying out MLR checks.
To save on all this and the weed out time wasting applicants might I suggest that any applicant has to be pre vetted by their legal representative who will provide to that applicant a cerified copy to show an agent that they are who they are before they start their property searching ?
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Now why couldn’t NAEA or RICs come up with the same statement. Makes sense. I’m not convinced a neg would recognise a genuine ID or clever fraud from a conveyancer though. They would probably do what they do now is file it away never to be seen again, unless they had the word “criminal” painted on their forehead.
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Many conveyancers have clients who do not live near their offices. Many agents recommend clients to volume conveyancers (who do cannot see their clients) in order to receive a referral fee. Perhaps, in order to really justify receiving that referral fee, they could agree to carry out some ID checks?
Conveyancers are also not ‘trained’ to carry out ID checks, nor do they have the ‘expertise and resources’. Conveyancers use many methods to try to check ID. Those methods are as available to agents as they are conveyancers.
Like I said, it makes perfect sense for agents to get more involved. The agent usually sees, in person, both buyer and seller, often at the property. What better way to carry out ID checks etc.
I sense a certain amount of trepidation coming from some estate agents. Maybe conveyancers and agents should be working together on this, for the greater good, i.e to stop fraud!
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There is a thing called notarised just like many other documents they use for those not local. Why burden another person with the same work they do anyway, for the conveyancer will not proceed without their own checks as they have a duty to do them, making the agents work duplication and redundant!
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Many conveyancers have clients who do not live near their offices. Hello, so do agents.
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Woodentop you probably have no idea of the number of cases of property fraud that have been committed over the last few years and how they have been committed. They make very interesting reading. Most conveyancers now carry out lots of checks, and having documents ‘certified’ (not ‘notarised’) by other conveyancers, out of the area, is not a great way to proceed. Like agents, conveyancers have not been trained to spot forged documents. You haven’t really presented a worthwhile argument as to why agents shouldn’t do more. However, if I was an estate agent, I would probably be supporting you 100%. Let some other mug carry the can.
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Actually I do know alot about fraud and false ID, having investigated many cases (thats another story, not for here) but what you seem in denial is that conveyancer do it anyway and you/they are required by the regulations to do it. They do all the legal work with the responsibility that comes with it, to make sure the client can sell the property, the client is who they say they are, is registrered at land registry etc. Why duplicate the work, which the conveyancer will not accept from the agent as bonafide and they have to do it by regulation and law society rules. So you accept the legal profession do use “certified documents”, sorry I fogot that Notaries are redundant in law firms in this country!!!! but you are splitting hairs. Your argument appears to be head buried in the sand. Why should agents do more that they are not competent to perform, have the training or resources when someone else is doing it and has the priority and arguably the final responsibility. Your argument is to burden agents with duplication and liability when it is unecessary. Not efficeint and not welcome. But then you fight the conveyancer side, good try. The mugs needs to own up to their own responsabilities!
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I have heard the “We have done it for years without a problem” argument from agents and that is fine, because it was a voluntary step some agents took and failure to get the ID had no implications whatsoever (Except where you were telling buyers you had a duty under the ML Regs to obtain the ID then you were at risk!)
The point I am making here is about control. Where you have a statutory duty to do something you must have control. If you don’t, it makes a mockery of the Statutory duty.
You have a statutory duty not to speed – so you take your foot off the pedal! This obligation is akin to you having the duty not to speed but someone else is driving and all you can do is tell them to take their foot off the pedal!
Agents may be able to establish who the buyer is by speaking to solicitors; they be able to persuade buyers to provide ID, but the word MAY is the important one because in actual fact that means you have NO control.
That lack of control makes agents vulnerable to non-compliance and the consequences.
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That lack of control makes agents vulnerable to non-compliance and the consequences.
This is the point, is it not.
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