PM4U provides Estate & Lettings agency work ONLINE and is registered at HM Revenue and Customs (HMRC) for anti-money laundering supervision.
PM4U is required under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to put in place appropriate policies, controls and procedures in order to prevent any of our services being used or potentially used for any money laundering activity, as well as any of our staff being exposed to money laundering and terrorist financing.
2. What is Money Laundering and Terrorist Financing?
Money laundering can be defined as the process to move illegally acquired cash through financial systems so that it appears to be from a legitimate source. In the property sector this may involve a landlord buying the property with criminal funds, tenants may pay rent using criminal funds, and/or a landlord and tenant may be part of the same criminal group whereby the criminal funds are laundered under the veil of rent payments.
Terrorist financing is providing or collecting funds (legitimate or not) to be used to carry out an act of terrorism.
3. Money Laundering and Terrorist Financing Legislation
The principal pieces of UK legislation covering anti-money laundering and counter-financing of terrorism:
- Terrorism Act 2000.
- Proceeds of Crime Act 2002; and
- Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘the Money Laundering Regulations 2017) as amended by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019.
3.1 - Proceeds of Crime Act 2002
The Proceeds of Crime Act 2002 (POCA) consolidated, updated and reformed criminal law with regard to money laundering.
The Proceeds of Crime Act 2002 (‘POCA’) sets out the primary offences related to money laundering:
- concealing, disguising, converting, transferring criminal property or removing it from the UK (Section 327 POCA).
- entering into or becoming concerned in an arrangement which you know, or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person (Section 328 POCA); and
- acquiring, using or possessing criminal property (Section 329 POCA).
The primary offences carry a maximum penalty of 14 years’ imprisonment, unlimited fines or both.
The secondary offences related to money laundering are:
- failing to disclose knowledge or suspicion of money laundering to the Money Laundering Reporting Officer (MLRO) (Section 330 POCA).
- failure by the MLRO to disclose knowledge or suspicion of money laundering to the National Crime Agency (Section 331 POCA).
- ‘tipping off’ whereby somebody informs a person or persons who are, or who are suspected of being involved in money laundering, in such a way as to reduce the likelihood of their being investigated or prejudicing an investigation. Tipping-off can only be committed after a SAR (including an internal SAR to the MLRO) has been made (Section 333A POCA); and
- prejudicing the investigation whereby a person interferes with relevant material (Section 342 POCA).
The secondary offences are punishable by up to five years' imprisonment, a fine or both.
You will only be guilty of an offence if you disclose that an SAR has been made or that an investigation is being carried out or contemplated.
3.2 - The Terrorism Act 2000
The Terrorism Act 2000 sets out a similar pattern of offences to those contained in the POCA:
- Fundraising for the purposes of terrorism.
- Using or possessing money for the purposes of terrorism.
- Involvement in funding arrangements.
- Money laundering; facilitating the retention or control of money that is destined for, or is the proceeds of, terrorism.
- Failure to disclose offences.
- Tipping-off offences.
All offences carry heavy criminal penalties. Any member of staff could potentially be caught by the money laundering provisions, if they suspect money laundering and/or terrorist financing and either become involved with it in some way, and/or do nothing about it.
3.3 - Money Laundering Regulations 2017
The Money Laundering Regulations 2017 as amended by The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 set out what letting agency businesses must do to prevent their services being used for money laundering and terrorist financing by implementing a number of administrative requirements.
PM4U is required to:
- Carry out a risk-based approach towards anti-money laundering and conducting customer due diligence.
- Adopt a procedure to enable the reporting of suspicious activity.
- Maintain adequate records and carry out regular reviews:
- Ensure that all employees receive training of the money laundering risks and their duties under the legislation described above.
4. Scope of the Policy
The broad definition of money laundering means that potentially anyone could commit a money laundering offence, this includes customers, employees of PM4U and temporary staff.
Estate & Lettings agency businesses often handle customers money, including fees, deposits and rents. Estate & Letting agents also have knowledge of both parties to a transaction, and if there are any intermediaries. PM4U therefore has an important role at the outset to identify any suspicious activity.
This policy aims to ensure that PM4U and all its employees understand and comply with the obligations set out in anti-money laundering legislation. All employees must follow the procedures set out below which have been developed by PM4U to mitigate and effectively manage the risks of money laundering and terrorist financing.
Any breach of this policy will be a serious matter, which may result in disciplinary action, and could result in an employee becoming personally liable to criminal prosecution. Substantial fines may also be incurred and untold damage to an employee or PM4U reputation.
5. Money Laundering Reporting Officer (MLRO)
PM4U will appoint an MLRO to be responsible for anti-money laundering activity within PM4U. The officer nominated to do this is Argentina Fernandes.
PM4U will also appoint a deputy MLRO who will be responsible in the absence of the nominated officer. The deputy MLRO is Gregory Duggan
The MLRO will ensure that:
- appropriate training and awareness are provided to new and existing PM4U and that this is reviewed annually and updated as required.
- they keep up to date with all anti-money laundering legislation and guidance from relevant bodies, such as HM Revenue & Customs.
- appropriate anti-money laundering systems and processes are incorporated by PM4U and kept under review.
- internal audits and regular reviews are carried out, and PM4U policies, systems and processes shall be updated when required.
- disclosures shall be properly considered and investigated further if the MLRO and/or deputy MLRO suspect or should reasonably suspect that money laundering has taken place.
6. Suspicions of Money Laundering
There are a number of factors which may indicate, or which may cause you to suspect that money laundering is taking place. Below is an inexhaustive list of scenarios/points to consider which may indicate suspicious activity:
- [The customer is reluctant to meet face to face.
- The customer is reluctant to provide details of their identity and source of funds.
- One party to the transaction is established in a ‘high-risk third country’.
- There is no apparent reason why the customer has chosen PM4U over another organisation that would have been better placed to act.
- Complex company structures are in place which make it difficult to identify the true owner.
- One or more individuals involved are in public positions and/or are from locations that carry a higher exposure to the possibility of corruption.
- Monies have been paid by a third party who does not appear to be connected with the customer.
- Funds are being sent abroad or to an unusual destination and/or to an unconnected third party.
- There are late changes to the party in the transaction.
- Customer asks to hold cash in PM4U our account for no apparent reason.
- The customer requests to pay the full or a large payment in cash or cleared funds up front.
- The transaction is unnecessarily complex for what the parties are hoping to achieve.
- Funds are paid in part and/or using foreign currency.
- Multiple payments are made from different bank accounts.
- There are unusual sources of funds, for example, use of complex loans, mortgage from an unknown/overseas bank.
All employees/temporary staff/contractors must immediately/promptly report any knowledge of, or suspicion of (or where there are reasonable grounds to suspect) suspicious activity to the MLRO in the prescribed form as set out in this policy document. Failure to do so is an offence that could result in five years imprisonment.
Once the matter has been reported to the MLRO, the employee/temporary staff/contractors must follow the directions given to him/her and must NOT make any further enquiry into the matter or proceed further with the transaction until you have consent from the MLRO to do so.
The employee/temporary staff/contractors must NOT voice any suspicions to the person(s) whom they suspect of money laundering, as this may result in the commission of the offence of “tipping off”. They must NOT discuss the matter with others or note on the file that a report has been made to the MLRO in case this results in the suspect becoming aware of the situation.
7. Consideration of the Disclosure by the MLRO
Once the MLRO has received the report, it will be evaluated in a prompt/timely manner in order to determine whether:
- There is actual or suspected money laundering taking place; or
- There are reasonable grounds to know or suspect that this is the case; and
- Whether the MLRO needs to lodge a Suspicious Activity Report (SAR) with the National Crime Agency (the NCA).
Where the MLRO concludes that there are no reasonable grounds to suspect money laundering then consent will be given for any on-going or imminent transaction(s) to proceed.
Where consent is required from the NCA for a transaction to proceed, then the transaction(s) in question must not be undertaken or completed until the NCA has given specific consent, or there is deemed consent through the expiration of the relevant time limits without objection from the NCA.
All reports referred to the MLRO and reports made to the NCA will be retained by the MLRO in a confidential file kept for that purpose, for a minimum of 5 years from the date on which the transaction occurs or the date the business relationship with the customer ends. No communication regarding suspicious activity, including reports referred to the MLRO, or reports made to the NCA should be placed on a customer file as the customer has the right to access a copy of their file.
[The MLRO must also consider whether additional notifications and reports to other relevant enforcement agencies should be made].
8. Firm Wide Risk Assessment
PM4U has assessed the risks of its exposure to money laundering and terrorist financing. PM4U Firm Wide Risk Assessment is available separately.
PM4U will keep the Firm Wide Risk Assessment under regular review and any changes will be recorded.
The procedures set out in this policy aim to manage and mitigate the risk of money laundering and terrorist financing. Where there is a higher risk of being exposed to money laundering, enhanced due diligence will need to be carried out.
[If there are certain customers or transactions that PM4U is not willing to act for, or if there are any firm wide rules about accepting cash payments or certain identification requirements which must be followed then these should be listed here].
9. Customer Identity Check and Risk Assessment Form
All employees/temporary staff/contractors must assess the money laundering risk for each transaction and customer, by completing a Customer Identity Check and Risk Assessment Form at the beginning of the transaction and before the transaction completes. This will enable you to choose the appropriate level of customer due diligence to be carried out. The form must also be updated if the details of the transaction recorded on the form change.
Directors/Partners will deal with due diligence. Staff can only deal with this with director/partner “sign off”].
10. Due Diligence
The identity of all customers must be identified and verified, along with the contracting party and any beneficial owners, where an agreement is concluded for a ‘High Value Let’ (where the letting of land for a term or of a month or more, and at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 euros or more). All employees/temporary staff/contractors should keep a clear written record of all the steps taken to identify the customers and any beneficial owners. The Customer Identification and Risk Assessments will be regularly reviewed and must be kept up to date.
As well as identifying and verifying customers, the contracting party and any beneficial owners, it is important that all employees/temporary staff/contractors also understand the customers business and/or circumstances and the intended purpose of the transaction. Due diligence is an ongoing obligation and should be monitored and reviewed throughout the transaction.
Listed below are the PM4U due diligence requirements in order to identify and verify individual landlords, tenants, beneficial owners, listed companies, limited companies, offshore companies, trusts and personal representatives.
If an individual or organisation is not from the UK and the documents required are in a foreign language, these should be translated and certified by a lawyer, bank manager, accountant or GP whose identity can be checked by reference to a professional directory. as evidence of the landlord or tenant’s identity.
As part of the due diligence procedure, all employees/temporary staff/contractors should check the details of an individual and/or organisation against the following sanctioned lists:
- [Financial Sanctions List.
- List of terrorist groups or organisations banned under UK law.
- List of countries categorised as ‘high-risk third countries’.
- List of third countries with weak anti-money laundering and terrorist financing
If you cannot comply with the customer due diligence measures, for example the individual is not willing to prove their identity, Other i.e., the individual is on the sanctions list, the customer falls short of The Organisation's specific due diligence requirements, you should immediately seek advice from the MLRO. You should also file a report to the MLRO who will then consider if a report needs to be submitted to the NCA.
10.1 - Individual Landlords or Vendors
The identity of a landlord or Vendor must be obtained and verified before we can market their property which is to be a ‘High Value Let’. In order to ‘identify’ our customer, the landlord must provide the following information at the outset of the transaction:
- Full name.
- Date of Birth; and
- Residential Address.
This information must be ‘verified’ by seeing an original of one document in List A and one from List B [and Other procedures which are applicable to the Organisation e.g. service providers which carry out identity checks]
List A – Identity Document
- [Current passport
- Current photo card driving licence.
- National Identity card
- Firearms certificate
- Identity card issued by the Electoral Office for Northern Ireland
List B – Proof of Address
These documents must be dated within the past 3 months.
- [Current photo card driving licence (if not used as the identity document)
- Current year’s council tax bill
- Benefits Entitlement Letter
- Most recent mortgage statement.
- Bank or building society statement.
- Utility bill (not mobile) from the last three months
[We also require one document from List C:
List C – Proof of Ownership
- Most recent mortgage statement.
- Tenancy Agreement
- Solicitor’s letter confirming house purchase/deeds/land registration/tenancy agreement]
10.2 - Individual Tenants
Tenants must also be identified and verified before a business relationship is established. A business relationship is established at the point at which the tenant’s offer is accepted. You must write to the tenant and ask them either to bring in their identification documents (one from List A and one from List B) or a photocopy which has the original certification from an appropriate person (a solicitor, chartered accountant, a bank or a notary) and who must be independent from the tenant. They must certify that the document is a true copy, and the customer is who they say are.
10.3 - Beneficial Owners
Due diligence must also be carried out on all beneficial owners who must be verified and identified. A beneficial owner could be a co-owner of the property who is not listed as a customer, or a landlord or tenant if a customer is the principal agent acting on their behalf. If the latter, you should also obtain evidence that the individual has the authority to act for them. You will also need to carry out customer due diligence on any person acting on behalf of the landlord or tenant.
In terms of corporate bodies, the beneficial interest of a company must also be identified. [You should refer any company, foundation or trust structures to the MLRO who must understand the ownership and control structure of any such legal arrangement and must verify the identity of the ultimate beneficial owners].
Once the structure of the customer has been understood and the ultimate beneficial owner has been identified, the identity must be ‘verified’ by seeing a document from List A and one from List B.
10.4 - If the customer is a listed company on a regulated market, a public authority or a financial institution that is authorised by the Financial Conduct Authority then these are deemed to be ‘low risk’ for money laundering if there are no other reasons to suspect money laundering activity. Simplified due diligence may be carried out in this instance where all that is required is a printout of the entry in the FCA register or copy of the dated page of the website of the relevant stock exchange, or evidence of the existence of the authority from an official government website. You should record the evidence on the customer file and keep this under review.
10.5 - If the customer is a limited company, the following documents must be obtained:
- Name, registered number, registered office, and principal place of business.
- Certificate of incorporation.
- Articles of Association.
- Memorandum of Association.
- Names of all directors.
- Verify the members of the management body, or if none, its equivalent and the name of the senior person responsible for the company.
- Individual identity evidence (one from List A and one from List B) for all beneficial owners who own or control over 25% of the shares or voting rights in the company or otherwise exercises control over the management of the company (this may be an individual or other entity).
If the customer is a holding company and there are subsidiaries, you must repeat the above identification and verification process for each subsidiary company. This applies for both limited companies and offshore companies.
You must look through the ownership structure of any companies or trusts to establish the ultimate beneficial owners.
[For complex company structures refer the matter to the MLRO].
[In addition to the above, you should also search for Persons of Significant Control at Companies House, company website searches, searching a relevant company registry, and enquiries of the customer].
10.6 - If the customer is an offshore company, the following documents must be obtained:
- Name, registered number, registered office, and principal place of business.
- Names of the members of the management body, or if none, its equivalent and the name of the senior person responsible for the company.
- The memorandum of association or similar documents.
- Names of all directors.
- Verify the members of the management body, or if none, its equivalent and the name of the senior person responsible for the company.
- Certificate of Incumbency (if applicable).
- Nominee director declaration and/or general Power of Attorney (if applicable).
- Individual identity evidence (one from List A and one from List B) for all beneficial owners with 25% or more of the shares/or voting rights in the company or otherwise exercises ultimate control over the management or controls the corporate body (this may be an individual or other entity).
If the documents required are in a foreign language, these should be translated and certified by a lawyer, bank manager, accountant or GP whose identity can be checked by reference to a professional directory.
10.7 - If the customer is acting on behalf of a trust, the following documents must be obtained:
- Trust deed.
- List of trustees.
- List of beneficiaries.
- Name of the settlor.
- Individual identity evidence (one from List A and one from List B) for the customer(s) (who may be a trustee, settlor, or beneficiary), the trustees, and [the settlor, beneficiaries and any individuals who exercise control over the trust].
10.8 If the customer is acting as a representative of an estate, we will require the following documents:
- Grant of probate (if a will was left).
- Letter of administration (if no will was left).
- Individual identity evidence (one from List A and one from List B) for the personal representative, either executor or administrator.
A copy of the identification documents must be kept on the customer file.
The original document must be seen unless you are given a photocopy which has the original certification from a third party who can provide this certification (a solicitor, chartered accountant, a bank or a notary) and who must be independent from the individual whose identity is being verified. The photocopy must certify that the document is a true copy, and the individual is who they say are.
10.9 - Other entities or organisations and documentation required relevant to The Organisation].
11. Politically Exposed Persons (‘PEP’)
If an individual is a person entrusted with a prominent public function held in the UK or abroad, they are likely to be a Politically Exposed Person ‘PEP’. This includes (but is not an exhaustive list) heads of estate, heads of government, ministers, members of parliament, members of the governing bodies of political parties and members of supreme courts. Enhanced due diligence (which is explained further below) will need to be carried out on the PEP and their family members and known close associates.
You should make brief enquiries to establish if a customer is or may be a PEP. [You can make these enquiries by searching the internet/government and parliament websites.
If you suspect they may be a PEP, you must also check if:
- they have been a PEP in the recent past (certainly in the last 12 months).
- they are immediate family members of a PEP.
- they are known close associates of a PEP.
You must get approval from the MLRO before accepting a PEP as a customer. If we agree to act for such a person, you will be required to take extra measures to establish the source of wealth and the source of funds which are involved. You must also conduct enhanced ongoing monitoring of the business relationship.
12. Enhanced Due Diligence
Enhanced due diligence is required to be carried out where there appears to be a greater risk of money laundering or terrorist financing, and the transaction appears to be ‘high-risk’ (which may include but is not limited to the following):
- No face-to-face meeting takes place with the customer.
- Instructions from a landlord or tenant or beneficial owner who is established in a high-risk third country.
- the transaction appears to be unusual or an unusual request for that customer.
- the transaction relates to a super prime property (usually within the top 5% of local market values.
- the transaction is highly complex, or the payment arrangements are overly complex.
- if the customer is a corporate body, use of private banking.
- payment from third parties with no obvious association.
- the landlord or tenant or beneficial owner is a politically exposed person (‘PEP’), an immediate family member or a close associate of a PEP.
- Instructions from a landlord or tenant or beneficial owner who is established in a sanctioned country or they are a sanctioned individual.
If you suspect the transaction is ‘high-risk’ you should speak to the MLRO before continuing to act for the customer who will need to approve the continuance of the business relationship. If enhanced due diligence is to be carried out, the MLRO must:
- [Obtain additional information on the customer and on the customer’s beneficial owner.
- Obtain additional information on the intended nature of the business relationship.
- Obtain information on the source of funds and source of wealth of the customer and of the customer’s beneficial owner.
- Obtain information on the reasons for the transaction.
- Conduct enhanced monitoring of the business relationship.
This may include but is not limited to the following:
- [Checking the organisations website to confirm the identity of personnel, its business address and any other details.
- Attending the customer at their business address.
- Obtain additional information or evidence to establish the identity of the landlord, tenant or beneficial owner.
- In the case of a PEP seek the approval of the senior management and establish the source of wealth and source of funds.
- Ensure that the first payment is made to a bank account in the customer’s name.
- Require that the identification documents are certified by a lawyer, bank manager, accountant or GP whose identity we can check by reference to a professional directory, or electronically verify the customer’s identity.
It is a requirement of the Money Laundering Regulations 2017 that regular training for staff on anti-money laundering and counter terrorism financing is undertaken and that a written record of the training delivered is maintained.
Training is compulsory for [all] new staff and all [relevant] existing staff will be trained at regular [two year] intervals (or when a significant change happens). The training will cover PM4U policies, details of the relevant legislation and guidance on how to identify suspicious activity and when and how staff can report their suspicions to the MLRO.
Arrangements for training are [add details of the training undertaken, how often it will be done and how this will be recorded (who has received the training and when it was done)].
PM4U will keep an up-to-date record of the training provided, which members of staff have received training and when it was received. Updated training schedules must also be kept.
14. Ongoing Monitoring
All employees/temporary staff/contractors must review the transaction at regular intervals to ensure that the information held is not only accurate and up to date but that the transaction is consistent with the knowledge of the customer, and their business. All transactions will be regularly reviewed and audited by the MLRO also.
Further customer due diligence may be required to be carried out if new people become involved in the transaction, previous due diligence carried out on an existing customer is inadequate, or the client’s identifying details have changed. The Customer Identity Check and Risk Assessment Form must also be updated if there are any changes to the transaction. A note of the review and any updated risk rating or any changes to the risk assessment should be kept on the file.
Any suspicious activity must be reported to the MLRO. Information that a suspicious activity is suspected and also a copy of a suspicious activity report should never be placed on a customer file.
15. Record Keeping
The customer identification evidence and details of the relevant transaction(s) for that customer must be retained for at least five years from the end of our business relationship with that customer or five years from the date when that transaction was completed.
The MLRO will keep any disclosure reports and any associated relevant documents in a confidential file for a minimum of five years.
PM4U will also maintain a written record of the:
- Firm Wide Risk Assessment.
- Policies, Controls and Procedures.
- Internal Audits; and
- Written record of the training programme and staff awareness of money laundering and terrorist financing legislation and related data protection requirements.
16. Data Protection
Customer details must be collected in accordance with the Data Protection Act 2018 and the UK GDPR (General Data Protection Regulations). This data can be “processed” as defined under the Data Protection Act 2018 to prevent money laundering and terrorist financing or where the use of the data is allowed by other legislation or after getting the consent of the data subject.
 You should identity and verify the identity of the settlor and beneficial owners on a risk-sensitive basis, and in accordance with your Customer Identity Check and Risk Assessment Form.