The 4th Anti-Money Laundering (AML) Directive – The impact so far

Since its introduction on June 26th 2017 the 4th AML has caused quite a stir, mainly because of the lack of prior warning of the finer details. The overall objective of the directive is to ensure that the UK’s anti-money laundering and counter terrorist financing regime is kept up to date, effective and proportionate. This should help to safeguard the UK’s financial system and ensure that it is an increasingly tough environment for both money laundering and terrorist financing.

How has it affected the industry since its introduction?

One of the most affected industries is the estate agent market. Combined with new investigation powers given to HMRC within the Criminal Finance Act 2017, agents are now obliged to perform further due diligence on cash buyers and sellers of properties which has begun to delay the buying process by as much as 6 months.

HMRC are already visiting higher risk estate agents, especially in London, who deal with foreign cash buyers. Lenders and agents also need to check whether buyers and sellers are politically exposed either in the UK or abroad.

With the new regime in full swing agents are seeing increased workloads due to the larger volume of administration required. On top of that, existing staff are required to retrain and in some cases agents are having to employ more staff to help with the administrative burden.

Some agents have excess of 100 branches and have received very little time to implement the new regulations meaning that a surprise visit from HMRC could result in some serious penalties.

Implementing these regulations will require businesses to re-think their current approaches to KYC as additional manpower, new technology, resource and improved process are called for. In short, the impact has been far reaching, the cost of which is being picked up by the consumer through increased house prices and fees.

Industry heads are recommending that agents appoint a money laundering officer or outsource the service to a specialist so that they are compliant and not falling foul of the directive resulting in fines from the HM Treasury.

This is where we come in…

The Advisory Bureau at Security Watchdog draws from over 20 years experience in risk mitigation and is therefore ideally placed to carry out audits to ensure full compliance with the 4th Anti-Money Laundering Directive.