menu close
rics-logo
search close
rics-logo

Popular searches

    close
    search

    The risks of bribery, corruption, money laundering and terrorist financing cut across our profession, regardless of geography or industry specialism. The UK has also introduced a raft of new financial sanctions in response to global events. This page contains resources to help you meet your requirements under the Rules of Conduct and carry out your practice in an ethical manner that reduces the risks of financial crime.

    RICS professional standard on Countering Bribery and Corruption, Money Laundering and Terrorist Financing

    RICS sets mandatory requirements for members and regulated firms globally in the professional standard on Countering Bribery and Corruption, Money Laundering and Terrorist Financing. This standard helps the profession identify and manage financial crime risks. It took effect from 1 September 2019.

    Members and firms must be aware of, and comply with, the requirements relating to financial crime in their own jurisdiction. If the standard contradicts local legislation then the legislation takes precedence.

    This document was reissued in July 2023 as a professional standard, having been previously published in February 2019 as a Professional Statement. The regulatory requirements remain the same and no material changes have been made to the document.

    Quick links

    file_download
    file_download
    file_download
    file_download
    file_download
    file_download

    Bribery and Corruption

    Corruption involves public officials and private bribe payers, but often also requires access to the financial system, the use of anonymous shell companies and professional facilitators to help launder the proceeds. Far from being a victimless crime, corruption also deprives state institutions of sorely needed resources. Bribery and corruption mitigation controls will typically involve monitoring the activities of your own organisation.

    Training and further resources

    RICS professional standards

    file_download

    RICS on-demand Online training

    credit-cards-money

    Countering bribery and corruption, money laundering and terrorist financing
    office-room-commercial-pexels.jpg

    Conflicts of Interest
    ContentMigration-DefaultEventImage

    Professional Ethics for RICS Members

    Money laundering and terrorist financing

    Money laundering is how criminals change money and other assets into clean money or assets that have no obvious link to their criminal origins. The purchase of property has the potential to be used by organised criminals to launder money due to the amount of money which can be "cleaned" in a single transaction.

    Global guidance

    Risk-based Approach Guidance for the Real Estate Sector

    The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. This guidance provides real estate professionals with the requisite tools and examples to support the implementation of FATF standards to implement a risk-based approach to anti-money laundering and countering the financing of terrorism.

    RICS guidance - Know the red flags

    The Red Flag Indicators document outlines the five main categories of red flags that property professionals need to be aware of. These are:

    • the client
    • the parties
    • the source of funds
    • the transaction
    • the instructions

    When you have assessed the money laundering risks to your business, we recommend that you consider three lines of defence, which are: your front line staff; your policies, systems (e.g. e-verification of passports) and controls; and senior management and internal specialists and audit functions.

    file_download

    RICS On-demand Online training and webinars:

    Countering bribery and corruption, money laundering and terrorist financing (eLearning) 

    An overview of best practice in holding clients’ money and how to avoid common issues – as identified by RICS Regulation – that may affect your business through the safeguarding processes set out in this short eLearning course.  

    Conduct Rules, Ethics and Professional Practice Competency Masterclass - 2 Part Series (Web Class) 

    Behaving ethically is at the heart of what it means to be a professional; it distinguishes professionals from other in the marketplace. This webclass is designed for APC candidates, supervisors and counsellors.

    RICS Anti-Money Laundering webinar with HMRC (youtube.com)

    This the first of two anti-money laundering webinars delivered by the RICS Profession Support & Assurance team alongside contributions from HM Revenue & Customs, Etive and Thirdfort. This webinar was aimed at RICS-regulated firms in the UK. We go through the AML regulations in the UK, and the AML risks in the property industry. The mandatory requirements and guidance around AML for all RICS-regulated firms is contained in the Countering bribery and corruption, money laundering and terrorist financing professional statement (2019).

    The UK Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017

    The 2020 UK National Risk Assessment for of Money Laundering and Terrorist Financing classed the UK property sector as High Risk. All professionals working in the sector must be aware of the issues and appropriately trained to identify and report any suspicions of money laundering or terrorist financing.

    Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs) set out the obligations on businesses and individuals to prevent their services being used for money laundering, terrorist financing or proliferation financing purposes. RICS-regulated firms based in the UK working in Estate Agency, Lettings Agency or Property Management are captured by the MLRs, and must register with HMRC, which is the supervisor for AML activity in the property sector.  Firms who undertake company services or accountancy services in the course of property management also must consider carefully whether they are in scope and take appropriate action to register and comply with the MLRs.

    For firms in scope for the MLRs, Senior Management are responsible for the oversight of their firm’s compliance. They can be held personally liable if they don’t take the steps necessary to protect their business from money laundering, terrorist financing and proliferation financing. RICS-regulated firms must also adhere to RICS standards and guidance.  ​

    What kind of work is captured by the UK Money Laundering Regulations?

    RICS-regulated firms undertaking activity in the following areas must register with HMRC. There are some very limited exceptions which allow some businesses to not register for supervision. However, even if a firm is exempt from formal money laundering supervision, this does not mean that it does not have to be concerned about money laundering risks.​ All firms have a responsibility under the Proceeds of Crime Act 2002 and RICS own professional standards and guidance.

    You must register with HMRC if your business carries out any work defined as estate agent activity in accordance with section 1 of the Estate Agents Act 1979 if you act:

    • on instructions from a customer who wants to buy, sell or let an interest in land, in the UK or abroad
    • to introduce your customer to a third party who wants to buy, sell or let an interest in land
    • after such an introduction to secure the sale or purchase of the interest in land

    The types of business that must register are:

    • high street or online residential estate agencies
    • commercial estate agencies
    • property or land auctioneers
    • land agents
    • relocation agents, property finders, private acquisitions specialists
    • a sub-agent providing estate agency services to a main estate agency business
    • asset management businesses that also provide estate agency services
    • business brokers or transfer agents brokering the sales or transfer of client businesses to third parties
    • social housing associations that offer estate agency services
    • letting or property management agents that offer estate agency services to landlord customers
    • construction companies (residential property builders) with a sales office on-site, where they act or offer additional estate agency services other than the sale of their own construction properties

    • Letting Agency work is defined in the MLRs as consisting of things done in response to instructions received from a prospective landlord seeking to find another person to let land/property or,
    • a prospective tenant seeking to find land/property to rent, and where an agreement is made for the letting of land/property, for a term of at least one calendar month or more​. The rent must be or equivalent to a monthly rent of 10,000 Euro or more (or equivalent in another currency, such as GPB)​

    The types of Letting Agency work that is captured in the MLRs:

    • High street or online residential Letting Agency businesses​
    • Commercial Letting Agency businesses​
    • Land agents that also carry out Letting Agency work​
    • A sub-agent that does Letting Agency work to a principle Letting Agency or Estate Agency business​
    • Asset management businesses that also do Letting Agency work​
    • Business brokers or transfer agents that broker a lettings agreement or arrangement such as the tenancy agreement​
    • Social housing associations that do Letting Agency work ​
    • Property management agents that also do Letting Agency work ​
    • In Scotland, a solicitors’ property centre that also conducts Letting Agency work

    There are exclusions set out in the MLRs which may mean that your lettings agency business is out of scope for AML supervision. This provides an exception for firms which are considered as engaging in financial activity on an occasional or very limited basis.​ In order to qualify for the exception, all seven criteria in must be met. ​Unless all the exemptions apply, you should register for supervision with HMRC and seek clarification from them direct if you are unsure.

    Property Management

    Property Managers will likely handle client money and will also have knowledge of both parties to a transaction, other intermediaries and how a transaction is funded. Property managing agents provide company services or accounting information to clients. HMRC advice clarifies that the scope of activities carried out by some agents will fall within the scope of the Money Laundering Regulations (MLRs) as Accountancy Service Providers (ASPs) and/or Trust or Company Service Providers (TCSPs). To establish whether the activities undertaken by your firm fall within the scope of the MLRs, you will need to think about whether your firm undertakes any of the following:

    • Recording, reviewing, analysing, calculating and reporting financial information.
    • Producing client reports on financial accounts.
    • Giving a customer specific tax advice, including advice on whether something is liable to a tax or duty.
    • Providing material aid or assistance on someone’s tax affairs.
    • Capital allowances computations – providing purely valuation advice in respect of capital allowances is not in scope of the money laundering regulations. However, advice on whether an asset is eligible for capital allowances, the calculation of capital allowances or advice on the tax relief that can be claimed on the asset falls within the definition of an Accountancy Service Provider and AML supervision is required. 

    • Acting as company secretary
    • Acting as a director
    • Providing registered office addresses

    Valuation is not an activity covered by the money laundering regulations but any firm that provides material aid, assistance or advice on someone’s tax affairs, whether provided directly or through a third party, will need to register for AML supervision. This includes any specific tax advice given to clients, including completing and/or submitting tax returns, advice on whether something is liable to tax, or advice on the amount of tax due. This work is captured by the Money Laundering Regulations which cover accountancy, tax, and trust or company services. Any firm that needs to register for AML supervision for accountancy, tax or trust and company services should investigate whether they should register with a professional body supervisor or with HMRC. There are a number of professional bodies who act as the main AML supervisors for tax and accountancy professionals, and members of professional bodies should register for AML supervision with their professional body. HMRC is the default AML supervisor when no professional body supervisor is available Contact details for tax and accountancy professional supervisors, and HMRC is available here.  The Association of Tax Technicians has also provided advice for their members in relation to AML supervision of capital allowances advisers on their website here.

    Key elements of UK Anti-Money Laundering requirements

    In the UK, the requirements on firms to tackle money laundering are in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and the Proceeds of Crime Act 2002. Below are some key regulatory requirements from this legal framework:

    • Firms in scope of the Regulations must register with an AML supervisor. For estate agents, lettings agents and property managers, this is HMRC
    • Ensuring all subsidiaries and branches, including those situated outside of the UK, apply AML policies and procedures when engaging in any regulated activity
    • Firm-wide risk assessment to consider specific risk factors as listed in the MLRs. A written record of the assessment must be maintained
    • All estate agents must carry out customer due diligence (CDD) on their customers and the beneficial owners of their customers prior to entering into a business relationship with them and at other specified times. Lettings Agents must undertake CDD on all parties to the tenancy agreement before the tenancy agreement is confirmed
    • Enhanced Due Diligence (EDD) must be applied on a risk-sensitive basis in any situation which presents a higher risk of money laundering or terrorist financing
    • Appropriate risk-management systems and procedures to determine whether a customer, or the beneficial owner of a customer, is a Politically Exposed Person (PEP) or a family member or a known close associate of a PEP
    • Requirements to provide relevant employees with regular AML training, including training on data protection
    • Requirements on regulated firms to report suspicious activity​ when knowing, suspecting or having reasonable grounds for knowing or suspecting, that a person is engaged in, or attempting, money laundering or terrorist financing.

    (This is a summary of the obligations but is not a complete guide and does not constitute specific legal advice. We thank Zia Ullah, Partner at Eversheds Sutherland and Helen Harvey, Associate at Eversheds Sutherland and Alex Ktorides, Partner Gordon Dadds for providing this summary.)

    Training, webinars and further resources

    RICS professional standard

    file_download

    RICS guidance - Know the red flags

    The Red Flag Indicators document outlines the five main categories of red flags that property professionals need to be aware of. These are:

    • the client
    • the parties
    • the source of funds
    • the transaction
    • the instructions

    When you have assessed the money laundering risks to your business, we recommend that you consider three lines of defence, which are: your front line staff; your policies, systems (e.g. e-verification of passports) and controls; and senior management and internal specialists and audit functions.

    file_download

    RICS On-demand Online training and webinars:

    handshake

    Introduction to the New Rules of Conduct

    The new Rules of Conduct will come into force on the 2nd of February 2022, This course will inform you of the changes you can expect.

    Rules of Conduct

    Ensure the highest standards with our rules of conduct for all professionals.

    HMRC training, guidance and further resources

    Real estate, lettings and property management businesses which fall within the scope of the Money Laundering Regulations must register with HMRC. You can sign up to emails and watch webinars from HMRC on their website.

    Guidance for Real Estate Agencies and Lettings Agencies

    Published by HMRC in 2022 HMRC, this guidance outlines how to meet the requirements for money laundering supervision.

    Money laundering: understanding risks and taking action for estate agency and letting agency businesses

    This guidance helps Estate Agents and Lettings Agents to carry out their own money laundering and terrorist financing risk assessment under Money Laundering Regulation 17(9).

    What You Need To Know, on-demand online course from HMRC

    This short course is aimed at managers and senior managers, but may be of value to other staff too, so they understand the importance of the Money Laundering Regulations and how to comply.

    Web-lecture on anti-money laundering regulation in the UK

    This lecture is a guide for surveying professionals on the UK anti-money laundering regulation changes that were updated in the UK on 26 June 2017. Presented on 24 July 2017 by Alex Ktorides, formerly of Gordon Dadds, and now with Bristows, the lecture provides an overview of the 2017 Money Laundering Regulations and is a good foundation for understanding their purpose and how to comply. Whilst this webinar focusses on real estate, it will be useful for lettings agents as well, as they are now captured under the Regulations (as of January 2020).

    Suspicious Activity Reports

    Suspicious Activity Reports (SARs) alert law enforcement to potential instances of money laundering or terrorist financing. SARs are made by financial institutions and other professionals such as estate agents and solicitors.

    Persons working in the regulated sector are required under Part 7 of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 to submit a SAR in respect of information that comes to them in the course of their business if they know, or suspect or have reasonable grounds for knowing or suspecting, that a person is engaged in, or attempting, money laundering or terrorist financing.  

    Guidance on submitted better Suspicious Activity Reports

    This guide from the National Crime Agency explains what SARs are, the obligations on firms to make them, how to submit one, and the information that should be included in your report.

    National Crime Agency Video on SARs

    This video explains how law enforcement uses the 3,000 SARs submitted every day to help fight economic crime.

    UK Financial Intelligence Unit Podcast

    The UK Financial Intelligence Unit (UKFIU), housed within the National Crime Agency, is responsible for receiving, analysing and disseminating financial intelligence submitted through the Suspicious Activity Reports (SARs) regime. In bite-sized episodes, the UKFIU’s podcase examines different aspects of financial crime and the ways law enforcement authorities tackle it.

    Professionals Against Corruption training for property professionals

    In collaboration with Professionals Against Corruption (PAC) , The Institute of Business Ethics provides multi-disciplinary training to property professionals several times a year. This training course provides practical insights to address the key ethical issues of bribery and corruption, money laundering and modern slavery. This course is exclusively for members professional bodies in accounting, legal and real estate sectors. Visit PAC training on the IBE website to find out the next dates.

    Sanctions

    Sanctions are restrictions put in place by the UN or national governments to achieve a specific foreign policy or national security objective.

    Financial sanctions include asset freezes, which:

    • prohibit dealing with a sanctioned person’s assets, including funds and property
    • prohibit making funds or goods available – directly or indirectly – to a sanctioned person
    • place restrictions on sanctioned persons’ access to financial services and markets

    Many states have sanctions regimes that prohibit or limit dealings with sanctioned people, entities and their funds, with stiff penalties for those who do not comply. RICS expects firms to understand and comply with the sanctions regimes relevant to the jurisdictions that they practice in, and understand the relevance of international sanctions to their obligations under the Rules of Conduct ‘not to facilitate any financial crime’ (Rule 1.12).

    UK Sanctions

    The UK sanctions regime is far-reaching. All UK nationals and legal entities, wherever they are in the world, and all individuals and legal entities operating within the UK, must comply with UK sanctions and have a general obligation to report to the Office for Financial Sanctions (OFSI) any information that would ‘facilitate compliance’ with the regulations.

    Under the RICS Professional Standard for Countering Bribery and Corruption, Money Laundering and Terrorist Financing, all RICS-regulated firms must check potential customers or clients (or their ultimate beneficial owner) are under any relevant sanctions that prohibit establishing a business relationship with them.

    Further resources

    RICS Guidance

    In March 2022, RICS updated its guidance intended to support members and firms in the UK to understand their obligations under the Sanctions Regime given the increased risks associated with the Ukraine crisis.

    file_download

    UK Government guidance

    UK financial sanctions: General guidance for financial sanctions under the Sanctions and Anti-Money Laundering Act 2018 - GOV.UK (www.gov.uk)

    This guidance is produced by the Office of Financial Sanctions Implementation (OFSI), designed to help ensure financial sanctions are properly understood and adhered to.

    OFSI blog

    The blog Office of Financial Sanctions Implementation provides updates on sanctions, exemptions and useful guidance on how to comply.

    RICS webinars

    Overseas Entities and UK Financial Sanctions (www.youtube.com)

    This webinar provides an overview of the sanctions requirements, UK legislation and guidance, and some practical tips to help you comply. In particular, this webinar will provide updates on financial sanctions and the Register of Overseas Entities. It was recorded in March 2023.