Dodgy estate agents beware
If you have failed to register with the OFT as an estate agent or have registered but are failing to comply with the AML regulations, then beware.
The OFT has now published its code of practice on the conduct of its AML visits (Visits to businesses under the Money Laundering Regulations 2007 Code of Practice October 2011). Whilst it is difficult to predict how many of the 6000 or so registered estate agents will be visited, in view of the risk-based approach taken by the OFT, it is fair to assume that the OFT will concentrate its limited resources on those agents which intelligence suggests are in most flagrant non-compliance. Such intelligence may flow either from local Trading Standards who may have information that a particular agent is failing to comply with, for example, its legal obligations to treat both buyers and sellers honestly, fairly and promptly or directly from disgruntled members of the public and may well include estate agents who have yet to register with the OFT.
Whilst the OFT is committed to acting in a targeted and proportionate manner to ensure it obtains proportionate and effective outcomes, one of its twin key themes for 2011-2012 is high impact enforcement to achieve compliance with competition and consumer law with maximum deterrent effect (OFT Annual Plan 2011-2012). Accordingly, the financial penalties for breaches of the regulations take into consideration the turnover of the business during the period of non-compliance, which is then adjusted for aggravating or mitigating factors and then subjected to a final 'appropriateness' test. In the absence of a statutory cap on penalty levels, the OFT will use a penalty scale of up to 15 per cent of relevant turnover, this being reserved for the most serious breaches where, for example, financial crime was intentionally facilitated by the breach. Of course, for the really serious cases, the OFT may choose to pursue a criminal prosecution which if successful exposes the guilty party to imprisonment for up to two years, an unlimited fine or both! (See OFT Anti-Money Laundering Enforcement Principles May 2011)
Having been on both sides of the FSA regulatory fence in systems and controls failure cases (including AML), we have seen how tough the FSA can be. It looks like the OFT might be even tougher.