Developers are exempt Money Laundering Regulations, estate agents are not

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Aniti-money
Laundering:

Developers selling homes through their own on-site sales
offices are exempt Money Laundering Regulations (AML), whereas if an agent is
selling, then they would not be.

Property Industry Eye
reports that this situation would seem anomalous, but HMRC has confirmed to the
Eye that this is indeed the case.

It seems that developers, as far as HMRC is concerned, are classed
as private sellers of peer to peer sellers, and like them, they are not
expected to be compliant, they are not caught by the AML regulations.   

A query about this emerged after a buying agent, purchasing
a property from a developer on behalf of a client, was told that AML applied to
him, whereas not to the developer.

HMRC told the Eye:

“If an individual or company sells property they own to an
individual that they find themselves, this is a private sale and does not
involve an estate agency.

“If it is a different company that introduces the parties
for sale/purchase, then this business is classed as an estate agency and must
be registered for AML supervision.�

The full response from HMRC was this:

The Money Laundering
Regulations are about supervising certain specific businesses conducting
relevant activity. This includes estate agencies.

The definitions of
estate agency businesses and what is relevant activity are defined in the
Estate Agents Act 1979. This legislation is owned by NTSELAT (the National
Trading Standards Estate and Letting Agency Team). Owners of property and peer
to peer sales of said property are not covered in this definition.

If an individual or
company sells property they own to an individual they find themselves, this is
a private sale and does not involve an estate agency. If it is a different
company that introduces the parties for sale/purchase, then this business is
classed as an estate agency and must be registered for AML supervision.

A new EU directive from June 2017, cited by the Eye, states that agents entering into a
business relationship with both sellers and buyers requires agents to scrutinise
buyers’ finances. This would include auctioneers who are required to check out
all potential purchasers before giving them a paddle so that they can bid for a
property – but developers, it seems, are exempt when they use their own sales
teams.

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