The new RICS Professional Statement on Anti-Money Laundering versus the “Official” UK Money Laundering Regulations and HMRC Guidance

It was with interest that I read the RICS Professional Statement “Countering Bribery, Corruption, Money Laundering and Terrorist Financing” which was published on 1 February and will be effective from 1 September 2019.

Whilst I accept that it is difficult to craft a “one size fits all document”, I have been surprised at the oversimplification of the suggested template documents included in the Appendices to the Practice Statement and the lack of harmonisation of the Practice Statement with published HMRC Guidance which is compulsory for the Estate Agency sector and dovetails with the UK Money Laundering Regulations which were revised in June 2017. It is the case since 1 April 2018 that estate agency businesses not regulated by the RICS must be regulated by HMRC and follow their Guidance.

“Reliance” is a particularly important area for the Estate Agency sector. Since June 2017, all estate agents are obliged to undertake anti-money laundering checks not only on their client, but also on the counterparty – a uniquely onerous, and in my view unfair obligation. Regulation 39(2) of the Money Laundering Regulations 2017 effectively allows surveyors and estate agents to rely on the due diligence undertaken by another regulated person such as a surveyor, estate agent, solicitor or accountant.

It states:

“When a relevant person relies on the third party to apply customer due diligence measures it must immediately obtain from the third party all the information needed to satisfy the requirements of regulation 28(2) to (6) and (10) in relation to the customer, customer’s beneficial owner, or any person acting on behalf of the customer;”

The HMRC Estate Agents Guidance states:

“The third party must agree that you will rely on them. The agreement must include arrangements to obtain immediately on request copies of the customer due diligence information from the third party.”

I was therefore interested to read Appendix C to the RICS Statement which contains such a template reliance letter. The most important line in the Template Letter states:

“[I/we] agree to make available to you as soon as reasonably practicable on request any information and copies of any identification and verification data relating to [client]
[and any beneficial owner] which [I/we] obtained when applying customer due diligence measures”;

So whilst the Regulations and HMRC Guidance require a third party to provide the information “immediately on request”, the RICS has decided that it is good enough to provide the information “as soon as reasonably practicable”.

I have to say that I was pretty surprised at this “generous” concession by the RICS particularly as the original draft 2017 regulations before being published had proposed a two-day concession, which never found its way into the final Regulations. After all, “reasonably practicable” can mean a day, two days, seven days or even weeks if the information is stored remotely.

I have therefore been in correspondence with the Anti-Money Laundering team at HMRC who have told me:

• “HMRC were not consulted on the RICS Practice Statement and Appendices. We were informed shortly in advance the statement was to be published”; and

• “We would not comment on RICS Practice Statement, that is their own interpretation of the regulations”.

After some perseverance for a position from HMRC, I was finally told:

“Businesses must ensure they are complying with the MLR 2017. If businesses fail to comply with MLR 2017, they can be sanctioned”

So there you have it, the message to Estate Agents and the Surveying Profession is that the RICS is suggesting template letters which leave regulated estate agency businesses open to sanction by HMRC.

The RICS need to take steps to forthwith revise the Practice Statement.

Published on March 14, 2019