MPs want agents views on anti-money laundering after shock HMRC swoop

HM Revenue & Customs has issued more details of its bid to encourage estate agents to combat money laundering in the wake of yesterday’s shock announcement about huge fines and swoops on companies.

The tax authorities have visited 50 agencies - mostly in London but also across the Midlands and north of England - in a bid to crackdown on agents who fail to train staff appropriately or exercise appropriate due diligence on payments made by prospective buyers.

Now in a statement HMRC says it’s reminding the industry that it supervises more than 11,000 residential and commercial estate agents across the UK “and helps these businesses protect themselves from criminals who use property sales to launder cash or finance terrorism.”

Over the past three years, HMRC has carried out more than 5,000 interventions on businesses across all sectors with 655 penalties worth £2.3m issued in 2017-18. In addition, HMRC recovered over £31million under the proceeds of Proceeds of Crime Act.

Since then its penalties have included those revealed yesterday for Countrywide (£215,000) and the now-defunct online agency Tepilo (£68,595).

HMRC says it has webinars, guidance and e-learning have been produced by HMRC to help guide and educate estate agents on their money laundering responsibilities.

Meanwhile MPs are looking for estate agents’ and others’ views on the draft Registration of Overseas Entities Bill which wants more transparency about foreign buyers of property in the UK. 

The Bill, first revealed last September, sets out provisions to establish a new beneficial ownership register of overseas entities that own UK property. 

This follows a commitment made by the government at the Anti-Corruption Summit in 2016 to establish such a register, in order to combat money laundering and achieve greater transparency in the UK property market.

Now a committee of MPs, investigating the provisions of the Bill and the wider issue, wants views from interested parties. The Joint Committee on the Draft Registration of Overseas Entities Bill, which sat for the first time yesterday, wants written submissions in particular, although it will also call witnesses to give verbal evidence later in the process.

In particular, it’s asking:

- what is your assessment of the scale of the problem of money laundering in the UK property market? 

- what impact do you envisage the draft Bill will have on the UK property market?

- what impact is the Bill likely to have on existing owners of UK property? and

- do you have any comment to make about the sanction and enforcement measures proposed in this Bill? 

One London agent responded to the measure some months ago, suggesting it was the latest in a series of fiscal and bureaucratic obstacles making life unnecessarily difficult for High Net Worth overseas buyers.

In his blog, Trevor Abrahmsohn of Glentree Estates wrote: “International residential property buyers are facing a 15% transaction charge by way of SDLT or, they could purchase a property in a corporation and pay an ATED, the equivalent to a Mansion Tax, but if this is not enough to ‘put them off’ they are being ‘trussed up’ with the Non Dom Residency arrangements and now, they meet this new obstacle of the Overseas Entity Bill.

“Given that we need positive inflows of capital into this country, now more so than ever before in the post Brexit era, how many hurdles are we going to construct before the international investor gets tired of all this regulation and moves on to other parts of Europe who would welcome them with ‘open arms’?” 

You can give you view to the committee of MPs by following the guidelines here.