AML obligations under MLR 2017 apply on a risk-based basis. Customer due diligence must be applied under Regulation 27 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 whenever a business relationship is established or another trigger applies — which, for estate agents, means applying CDD to both the buyer and the seller on residential sales transactions, assessed on a risk-based basis. Cardiff Property Partners is Propertymark-registered (number PM-DEMO-001) and, separately, must comply with these statutory AML obligations as supervised by HMRC.
- The Property Ombudsman (TPO) can investigate consumer complaints about agent conduct and, via its Compliance Committee, expel agents from the scheme for failing to comply with awards. Membership of an approved redress scheme is required under the Consumers, Estate Agents and Redress Act 2007. TPO is not a regulator and does not investigate AML failures directly; AML supervision is the role of HMRC.
- Customer due diligence must be completed before a transaction is agreed — not at exchange or completion. Delaying checks is a common compliance error.
- Land Transaction Tax (LTT), administered by the Welsh Revenue Authority, applies to property purchases in Wales. AML checks support the integrity of LTT filings by confirming the identity of all parties.
What the Money Laundering Regulations 2017 Require of Estate Agents
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 — commonly called the Money Laundering Regulations 2017 or MLR 2017 — brought estate agents firmly within the UK's regulated sector. Every firm that carries out estate agency work in relation to the buying or selling of land or property must comply.
The core obligations under MLR 2017 are:
- Appoint a Money Laundering Reporting Officer (MLRO) with responsibility for overseeing compliance.
- Maintain a written AML policy covering risk assessment, customer due diligence, record-keeping, and staff training.
- Conduct customer due diligence (CDD) on buyers and sellers before a business relationship is established or a transaction is agreed.
- Apply enhanced due diligence (EDD) where higher risk is identified — for example, politically exposed persons (PEPs), high-value cash transactions, or complex ownership structures.
- Report suspicious activity to the National Crime Agency (NCA) via a Suspicious Activity Report (SAR) where money laundering is suspected.
Propertymark, the professional body for estate agents, publishes guidance on MLR 2017 compliance and requires all member firms to demonstrate adherence as a condition of membership.
ID Verification: What Estate Agents Must Check for Buyers and Sellers
Customer due diligence under MLR 2017 requires estate agents to verify the identity of both the buyer and the seller. Verification must be completed before the business relationship is established — in practice, this means before a property is listed or an offer is formally accepted.
Standard CDD requires:
- Proof of identity — a current passport or photo driving licence.
- Proof of address — a utility bill, bank statement, or council tax notice dated within three months.
- Source of funds — evidence that the funds used to purchase the property are from a legitimate source. This may include bank statements, mortgage offers, or evidence of property sale proceeds.
Where a buyer is purchasing through a company, trust, or other legal entity, enhanced checks are required to establish the beneficial owners — those who ultimately own or control the entity. This is a common area of non-compliance identified by HMRC supervisors during inspections.
At Cardiff Property Partners, our MLRO oversees all customer due diligence. Our process is conducted manually, with identity documents reviewed and retained in accordance with MLR 2017 record-keeping requirements.
How Cardiff Property Partners Conducts Due Diligence
Cardiff Property Partners is Propertymark-registered (PM-DEMO-001) and a member of The Property Ombudsman redress scheme. Our AML compliance framework covers every residential sales transaction across Cardiff, Penarth, Barry, Llandaff, Pontcanna, Whitchurch, and Roath.
Our due diligence process follows these steps:
- Risk assessment — before listing a property or accepting an offer, we assess the risk profile of the transaction and the parties involved.
- Identity verification — we collect and verify proof of identity and proof of address for all buyers and sellers.
- Source of funds verification — we request evidence of how the purchase is being funded, whether by mortgage, savings, or other means.
- Ongoing monitoring — where a transaction changes materially — for example, a change of buyer or a significant price reduction — we repeat our checks.
- Record retention — all CDD records are retained for five years following the end of the business relationship, as required by MLR 2017, and are then deleted unless there is a separate legal basis for continued retention.
Our team has annual certified anti-money laundering training, with refresher sessions when HMRC or Propertymark guidance changes to ensure staff remain current with regulatory requirements.
AML Supervision for Estate Agents: HMRC's Role
HMRC acts as the AML supervisor for all estate and letting agency businesses, including those that are members of professional bodies such as Propertymark. Unlike some accountancy professional bodies, Propertymark is not a listed Professional Body Supervisor under Schedule 1 of the MLR 2017, so Propertymark-registered firms must still register with and be supervised by HMRC for AML purposes.
HMRC has the power to issue financial penalties for MLR 2017 breaches. Penalties are calculated on a case-by-case basis and can be significant. HMRC publishes the names of firms that receive penalties — a reputational consequence that can affect both professional memberships and client trust.
The National Association of Estate Agents (NAEA) Propertymark and ARLA Propertymark both provide member guidance on AML compliance, including template policies and risk assessment frameworks. Cardiff Property Partners holds both NAEA Propertymark and ARLA Propertymark accreditation.
AML and Land Transaction Tax in Wales
In Wales, property purchases are subject to Land Transaction Tax (LTT), administered by the Welsh Revenue Authority. LTT returns must be filed and any tax due paid within 30 days from the day after the effective date of the transaction (usually the completion date), to the Welsh Revenue Authority.
Robust AML checks support the integrity of LTT filings. Where an estate agent has verified the identity of all parties and confirmed the source of funds, the transaction record is more likely to reflect the true nature of the deal. The Welsh Revenue Authority expects transactions to reflect their economic substance — AML compliance by agents is one layer of the broader framework that supports this.
Estate agents operating in Wales should also be aware that letting activity is regulated under distinct Welsh legislation. Under the Housing (Wales) Act 2014, all landlords with privately rented property let out on a domestic tenancy in Wales must register with Rent Smart Wales. Certain exemptions apply, including resident landlords and commercial or agricultural lets. Landlords who personally carry out letting or management activities must also hold a Rent Smart Wales licence. Landlords who appoint a licensed agent to carry out those activities on their behalf do not need a licence themselves, though they must still register. Letting agents conducting letting or management work must hold an agent licence. AML obligations also apply to letting transactions where they fall within MLR 2017 scope, as explained in the FAQs below.
Frequently Asked Questions
Do estate agents have to carry out AML checks on every buyer and seller?
Customer due diligence must be applied to both the buyer and the seller whenever a business relationship is established or another trigger under MLR 2017 applies. There is no minimum property value threshold, and the extent of the checks is assessed on a risk-based basis — higher-risk transactions require enhanced due diligence. Checks must be completed before a business relationship is established — not at exchange or completion.
What happens if an estate agent fails to comply with AML regulations?
Non-compliance with MLR 2017 can result in civil financial penalties issued by HMRC. In serious cases, criminal prosecution is possible. HMRC publishes the names of penalised firms. Propertymark can suspend or revoke membership, and The Property Ombudsman can remove a firm from its redress scheme — membership of which is required under the Consumers, Estate Agents and Redress Act 2007.
What is a Suspicious Activity Report (SAR) and when must one be filed?
A Suspicious Activity Report (SAR) is a formal report submitted to the National Crime Agency (NCA) where an estate agent suspects or has reasonable grounds to suspect that funds are the proceeds of crime or are connected to money laundering. Under the Proceeds of Crime Act 2002, persons in the regulated sector have a legal obligation to file a SAR where they know or suspect money laundering (ss.330–331). Separately, it is a criminal offence under s.333A POCA to tip off any person that a report has been made or is intended, where doing so is likely to prejudice an investigation. The MLRO is responsible for determining whether a SAR is required.
Does AML apply to lettings as well as sales?
Yes, in defined circumstances. The Money Laundering Regulations 2017 apply to estate agency work in connection with the buying and selling of land. Since 10 January 2020, letting agency work is also within MLR 2017 scope where the monthly rent is, or is likely to be, the equivalent of €10,000 or more. Letting agents handling client money are also subject to separate client money protection requirements. In Wales, letting agents conducting letting or management work must also be registered and licensed under Rent Smart Wales.
How long must AML records be kept?
Under Regulation 40(3) of MLR 2017, CDD records must be retained for five years from the date the transaction is complete (for occasional transactions), or five years from the end of the business relationship (for records relating to an ongoing relationship). These are separate triggers, not a 'whichever is later' test. Records must be available for inspection by the supervising authority on request, and personal data must generally be deleted at the end of the five-year period unless a separate legal basis for retention applies.
Cardiff Property Partners is a Propertymark-registered estate agent covering Cardiff and the surrounding areas, with NAEA Propertymark and ARLA Propertymark accreditation and membership of The Property Ombudsman redress scheme. If you have questions about our AML process or would like to discuss buying or selling a property in Cardiff, we are happy to help.