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‘Lazy’ agents warned that they cannot outsource money laundering and due diligence obligations

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A lawyer has warned that estate agents trying to offload their anti-money laundering responsibilities via outsourcing to a third party will not succeed.

Arthur Robinson, director at north-east law firm Emmersons, said: “Recently my firm received a request from an estate agent in relation to confirmation on how we carried out customer due diligence and AML checks, and asking to rely upon our processes.

“I declined the offer to act as their risk managers.

“Why anyone would wish to do this is beyond me, other than being lazy or misbelieving that reliance upon a third party such as a solicitor offers some form of protection.”

Robinson said the legal guidance is very clear.

Anyone relying on a third party still remains legally responsible for any failure – meaning that reliance itself is a risk.

Furthermore, if an agent relies on a third party to undertake the checks, the guidance says “you will still need to do your own risk assessment of the seller and buyer and the transaction and you must still carry on monitoring the business relationship”.

The guidance also stresses that reliance on a third party “does not include accepting from others to verify a person’s identity for your own customer due diligience obligations”.

Robinson said that his own firm has careful procedures in place, including initially checking photo identity; obtaining utility bills and six months of bank statements; checking the latter to see if it looks like a legitimate account – ie, to see if there is a history of money coming in and out.

Checks continue to be made as the transaction progresses and if there are any gaps in information or other concerns, the case is reviewed by a director and there can be no work undertaken on the file until the director decides there can be.

This can lead to requests for further information from the client or those making gifts a contribution to the purchase price, or a decision that the firm can no longer act.

Robinson said: “I wonder if estate agents are undertaking a risk assessment on the buyer and seller, and on the transaction itself, in relation to each transaction?

“I wonder how many are doing it thoroughly.

“Not long ago, we received an email from an estate agent to confirm that the person who had visited their offices was our client.

“How could we?

“Client due diligence and AML is not about a tick-box approach.

“It is not about obtaining photo ID and putting it on a file. It is not about ignoring inconsistencies.

“There is a process, which includes analysis and record keeping, which MUST be undertaken. It is either that or an appearance in court.”



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Source:: ‘Lazy’ agents warned that they cannot outsource money laundering and due diligence obligations