Estate agency AML fines on the rise

The average anti-money laundering (AML) fine issued to estate agents for non-compliance so far during 2022/23 has already crept beyond the average fines of the  seen last year.

The latest data for the 2022/23 financial year so far shows that the median AML fine issued to estate agency businesses is £5,350, according to analysis by Credas Technologies.

This marks a 49% increase versus the average fine issued during the 2021/22 financial year, the AML platform said.

While it remains the third-lowest average fine since AML supervision was introduced in 2017, the increase does reverse the previous downward trend seen since 2019-20.

As a result, estate agency businesses sit fourth in the table when it comes to the average fine issued so far this year, with just letting agencies (£9,050), art market participants (£10,000) and money service businesses (£1.5m) being issued higher average fines.

Since the introduction of AML supervision in 2017-18, estate agency businesses have been fined £2.5m in AML penalties. This ranks second across all supervised sectors, behind only money services businesses (£6.2m). 

What’s more, when it comes to the number of individual fines issued by HMRC since 2017, estate agents have the worst record, the research found.

The sector now accounts for 49.8% of the total 544 penalties issued across all sectors. 

Accountancy service providers (38.2%) and art market participants (3.7%) rank second and third respectively.

The latest data highlights that while the estate agency sector is by far the most frequently fined, it’s reasonable to assume that the reasons for being penalised are less severe than in other supervised industries.

Tim Barnett, chief executive of Credas Technologies, said: “Although the estate agency sector remains one of the most frequently penalised for AML breaches, the average fine issued had been in slow decline, indicating that the industry was very much heading in the right direction. 

“However, this positive trend has, so far, been reversed this year. This highlights the far tougher landscape we’re facing at present, with many agents likely feeling the pressure of an uncertain market. 

“As a result, it’s likely that they have been focussing their attention on overcoming the problems facing them, with AML due diligence being put on the backburner, albeit with often costly consequences.”