Customer Due

Diligence
How to meet HMRC
Expectations
Getting Customer Due Diligence (CDD)
right is a key part of your
anti-money laundering requirements
Malcolm Driscoll
as an estate agent and letting agent. Lead AML Consultant
FCS Compliance
Summary
You need to have a clear understanding of what
CDD is and will need to demonstrate that you
are conducting CDD properly to HMRC
inspectors.

In this handout we’ve highlighted the key points

covered by Malcolm Driscoll, Leading Anti-
Money Laundering (AML) Consultant at FCS
Compliance. With over 40 years of service in the
police investigating serious and complex fraud
and money laundering, Malcolm is an expert in
this field.

We’ll cover:
• Key CDD requirements & best practice for
estate agents and letting agents
• How to embed a compliance culture
within your office
• When enhanced CDD is required
• CDD for companies & identifying Ultimate
Beneficial Owners (UBOs)
• Q&As from Estate Agents and Letting
Agents
What are the multiple
levels of CDD?
Q: How do you identify which level of CDD is
required?
A: Simplified Due Diligence is carried out when
you’re dealing with a regulated entity, such as
solicitors in probate matters as Executors, re- Malcolm’s Advice…

“
possessed properties by banks, local authorities
and so on. Simplified CDD is used without the need
for ID checks when open-source information can
confirm who the entity is and that there is no
adverse media about them. The three most
Standard Due Diligence is often covered in your
important words I can
most common checks, such as checking photo ID give you are ‘write it
and a utility bill, POA, PEPs/sanctions checks, along
with Land Registry (for the seller) and Source of
down’. Or ‘print it off’, if
Funds (for the buyer). that’s easier. I’ve seen a
You would consider applying Enhanced Due
lot of agents check
Diligence when Standard Due Diligence reveals that things out with open
a person has had sanctions applied against them, or
that they’re a PEP (a politically exposed person).
source information, but
This also applies to high-risk customers with you’re not going to be in
allegations or convictions for example. Enhanced
Due Diligence should also be used in high-risk
a good position if you
jurisdictions and when dealing with properties that haven’t kept copies.”
fall within the top 5% of local market values in
which the agent operates.

Enhanced CDD for PEPs & high risk people

When dealing with a PEP, you should identify the

source of wealth as well as the source of funds. The
person’s profile and background should be checked
to determine how the funds were acquired. This
situation needs to be monitored on an ongoing
basis to identify anything that may look suspicious.

The Money Laundering Reporting Officer (MLRO)

should also be notified whenever a PEP, high risk
customer or person subject to sanctions is
identified.
Top Tip for carrying out CDD for companies &
CDD identifying Ultimate Beneficial
You not only need to carry out the necessary Owners
checks, but you need to be able to look back
When dealing with companies, you need to
and show how and when they were done.
identify the Ultimate Beneficial Owner (UBO).
When carrying out an ID check on a customer,
ensure that it’s clear who certified the This is the person with more than 25% of the
documents and when. A rubber stamp can voting rights or shares and the person who can
make things easier but add a date and exercise control.
signature to the certification too. When
checking things online, take dated screenshots Key documents required from companies:
and save them.
● Certificate of Incorporation
When should CDD be ● Memorandum or Articles of Association
● List of directors
carried out? ● Copy of share register
This should be carried out at the
commencement of the business relationship
and best practice is to have this ticked off prior
Carry out a risk rating
to exchange. This way you’re not wasting any Another of Malcolm’s recommendations is to
time, or potentially assisting with money risk rate your customers. It’s suggested your
laundering.
team have a checklist to refer back to. This will
ensure that nothing is missed.
Is CDD required for
Keep a copy of all checks in a file alongside your
lettings? risk rating form stating whether the customer
CDD is required under AML Regulations when a has been identified as low, medium or high risk.
property is rented at over €10,000 per calendar
month or equivalent. This includes the landlord,
tenant, authorised occupier and guarantor. It’s
best practice to carry out checks for lettings
under the threshold too.

Never take any deposits or other payments

before CDD has been completed.
Your questions answered
A quick look at some of the questions answered by Malcolm during the session.
Q: When checking documents like
bank statements, should we keep a
copy on file or destroy it once we
have seen it?
A: These should be retained for five years. You can
scan electronically and retain if preferred.
Q: Is it necessary to sign and date
the ID such as driving license and
utility bill? We use a rubber stamp.
A: The date and signature that the ID has been
certified and who has seen the subject should still be
added, as it’s important to know who did what and
when.
Q: GDPR states records should be
kept for no longer than five years,
but the Estate Agents Act says
seven years. Are we okay to keep ID
for seven years to comply with the
Money Laundering Regulations?
A: AML trumps GDPR in this case. You can keep
documents for longer in three circumstances. Firstly is
where there’s an ongoing court case. Second is where
you suspect, with good reason, that there may be an
ongoing court case. And thirdly, if you have
permission from the person you’re dealing with. It
comes down to being able to justify why you are
holding on to the documents.
Q: If we as an estate agent are
dealing with a property
management company selling on
behalf of the owners, do we still
need to get ID from the actual
owners of the property?
A: Yes. Find out who’s got the title to the property. ID
documents from the owners are required.
Information acquired through the third party would
be completing CDD, although this is likely to be
Simplified Due Diligence in view of their status.
Q: We use a system for AML checks.
If a client comes back as low risk, do
we still need to check ID
documents?
A: Yes. You can’t say someone is a low risk and
therefore documents are not required. You assess
someone’s risk by obtaining the documents and other
information and checking them out via online
verification.
Q: Does the agent’s CDD responsibility
end on completion?
A: The rules and regulations state that CDD should be
done prior to exchange. However, it’s an ongoing
process and if you suddenly become concerned at the
conclusion of a transaction, or something was missed,
you should revisit it and make it right. It’s not too late
to submit a Suspicious Activity Report (SAR).
Customer Due
Diligence
How to meet HMRC
Expectations

Malcolm Driscoll
Lead AML Consultant
FCS Compliance

Learn more about AML in the full webinar

hub.rightmove.co.uk/customer-due-diligence-
how-to-meet-hmrc-expectations