Leaving the EU does not mean leaving Anti-Money Laundering Laws behind

Brexit means that the UK’s anti-money laundering laws are no longer governed by the European Union (EU), but any estate agents that think that means a relaxation in requirements has got another think coming.

Not only has the UK transposed the latest European money laundering Directive - MLD6 - into UK law, but thanks to the UK’s history of going ‘above and beyond’ when it comes to fighting financial crime, AML laws are only likely to get stricter, as Martin Cheek, MD at anti-money laundering experts SmartSearch explains:

“The UK has a history of being ahead of the game when it comes to AML, not behind, and arguably has the most stringent AML laws in the world.

“While some European countries are slow to implement directives - for example, when 3MLD came into effect in 2004, France was fined by the EU for not implementing it into domestic law - the UK’s record is quite the opposite.”

In 2017, the UK had already established a public register of beneficial owners, a full four years before 5MLD came into force in 2020. The new requirements were created in direct response to several high-profile events - one of which was the publication of the Panama Papers in 2016 which exposed secret financial dealings of more than 200,000 offshore entities. But the UK was already putting measures in place before legally obliged to do so.

“Even now, some countries - including the US - still do not have publicly available beneficial owner lists,” continues Cheek. “The latest US regulations - AMLA 2020 - do stipulate that beneficial owners must be identified and recorded, but the database is non-public making it difficult for US financial institutions to run the appropriate checks on corporate clients.

“In comparison, the equivalent list in the UK - Companies House - is publicly available and includes information on corporate structure, beneficial owners, accounts etc about every registered company in the UK, making it much easier for estate agents and other regulated firms to run proper checks on their business customers.”

Cheek says that, post-Brexit, when no longer governed by the EU, it is likely that the UK will take more of a lead from the Financial Action Task Force (FATF) - the global money laundering and terrorist financing watchdog - when it comes to creating anti-money laundering laws.

“I would expect the UK to take a lead directly from FATF going forward, however, given that the EU is likely to be the UK’s biggest trading partner - and that MLD6 has already been transposed into UK law despite the fact we were no longer a member state when it came into force -  it is more than likely that the UK will implement all EU money laundering directives as they come through too,” he said.

“So, post-Brexit, not only are we unlikely to see a relaxation in AML rules, we might actually see stricter regulations, as the UK very much leads the way, both in AML regulation, but also, in creating regtech solutions to meet those regulations.”

Cheek says the easiest way for estate agents to ensure they meet their post-Brexit AML obligations  is to use electronic verification.

“Electronic verification is quicker, cheaper, more secure and more reliable than manual ID checks, and has proved to be the only real solution during the pandemic because all checks can be done without having to deal with paperwork or physical IDs  - you don’t even have to meet clients face to face,” he said. “and the good news is, there are a huge number of EV options for UK regulated firms.”

SmartSearch’s innovative online AML platform is constantly being updated to ensure it meets all UK AML laws giving estate agents peace of mind that they are fully compliant for the life of their contract.

The easy-to-use platform, which can be accessed via desktop or via a mobile device - enables estate agents to run comprehensive AML checks - with sanctions and PEP screening and adverse media checks - in a matter of seconds, with all search data automatically hosted on the system and monitored regularly for any changes.

Cheek concludes: “Estate agents using SmartSearch will be able to conduct full AML checks remotely, via their phone or tablet, which means they can onboard clients, with all the relevant post-Brexit AML checks, anytime, anywhere, without even needing to meet them in person. And with SmartSearch’s TripleCheck - which includes the latest facial recognition and selfie likeness technology - you can always be sure your clients are who they say they are.”