The move follows a highly charged meeting in London at which there was uproar, with agents finding it hard to believe what they were being told.Agents who share instructions – as is standard practice in London – say they were told that they must not share anti-money laundering (AML) check information on clients, and must also do due diligence on each other.At the meeting, agents accused the Government and tax authorities of having no understanding of the London market in particular, and of the general implications for the industry.The London meeting was one of a series being put on by the NAEA.Speakers were NAEA managing director Mark Hayward, James Munro of the National Trading Standards Estate Agency Team, Nigel Kirby of the National Crime Agency, and Sue Edwards of HMRC.Delegates were told that if they were acting as sub-agents, they must not rely on the main agent’s own due diligence but perform their own checks.In theory, that could involve a number of agents approaching the bemused seller or landlord to carry out checks.They were also told they must carry out AML checks on the main agent, and vice versa.That would almost certainly involve checking out the directors and also the agency’s other clients. One agent told EYE that the rules would mean doing  at least five AML checks.In London, it is standard for a main agent to take on an instruction, and to use sub-agents to find a buyer or tenant. Commissions are then split.The service LonRes is wholly predicated on instruction sharing.Andrew Ellinas, of London agents Sandford, said: “There is a lack of understanding from HMRC as well as the Government about the way in which the London market works.“The current legislation doesn’t allow for agents in London to carry out their daily working routine and the NAEA needs to speak up and apply pressure on the Government before agents are heavily penalised for simply doing their job.”He said that the main agent should identify and verify the vendor, and be legally able to pass this on to the sub-agent.Ellinas called for the law to be changed, saying: “The situation is currently unworkable. Agents will fall foul of the legislation when carrying out straightforward business and this is a huge issue.”Another agent, Vivienne Harris, said the regulations were poorly considered, unworkable and onerous.She said: “The people supposedly providing the guidance and making the rules have no conception of what estate agents do, how they work on a day to day basis and what impact these frankly ridiculous expectations will have on the industry.“Overnight, half commission deals could be wiped out for both the sales and lettings industries, as money laundering information will not only be needed for the seller, landlord, buyer and tenant, but it will also be necessary to be held about the main agent and the main agent’s client too.“This is before you even make an appointment for a viewing.“It seems that agents are also not allowed to accept the money laundering information second hand (even via a solicitor), so to comply, you will have to go to the main agent’s client directly and get the documentation yourself.“If I were the client I certainly wouldn’t want my details handed out *****-nilly, nor would I want to be bombarded by agents with whom I have no contact, writing to me to gain my personal details.“There is also the problem of data protection and how that will work too.”Mark Hayward told EYE yesterday: “We understand that members find the AML regulations cumbersome.“However, we cannot stress enough just how important it is for estate agents to take them seriously. The Government is firmly fixed on stamping out money laundering and it’s in all our interests for the industry to work with law enforcers.“The NAEA meets with HMRC on a monthly basis and we host a number of events to make sure members are aware of the rules.“We are acutely aware of the intricacies around commission sharing in relation to the central London market and will endeavour to provide clarity for a workable solution soon.“We will also be providing revised guidelines for all members shortly.”* The NAEA said that its investigation into money laundering following the C4 programme From Russia With Cash over two months ago is still continuing.

Extracted from Property Industry Eye

Written by: Rosalind Renshaw | SEPTEMBER 22, 2015