AML checks for estate agencies: What you need to know

Anti-money laundering (AML) compliance is a critical responsibility for estate agents. With property transactions often involving large sums of money, the sector remains a prime target for criminal exploitation. In this post, we explore AML checks for estate agents: why they matter, what’s involved and how modern software can make compliance more efficient and less time-consuming.

What are AML checks in estate agency?

Anti-money laundering (AML) checks are procedures designed to prevent property from being used to disguise the origins of illegally obtained money. For estate agents, this means conducting due diligence on buyers and sellers to ensure transactions are legitimate and comply with UK regulations.

Estate agents act as a gatekeeper in property transactions, making them responsible for identifying and reporting any suspicious activity. AML checks are a legal obligation under UK law and failure to comply can have serious financial and reputational consequences.

Why estate agents must conduct AML checks

Estate agents in the UK are classed as “regulated businesses” under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. As such, agencies must register with HMRC for supervision and are legally required to carry out AML checks on clients.

HMRC has stepped up enforcement in recent years with significant fines issued for non-compliance. Even unintentional breaches, such as inadequate record-keeping or failing to report suspicious activity can result in penalties.

Money laundering is just one part of a wider fraud risk landscape in the property sector. Fraudulent activity can result in significant financial and reputational damage – not only for buyers and sellers but also for the agents facilitating transactions. Understanding the impact of fraud helps reinforce why AML compliance is so essential. It protects against illicit transactions, builds trust and ensures your agency is operating within the law.

Although AML checks are most commonly associated with property sales, similar principles apply in the lettings market – particularly when it comes to verifying tenant identity and financial status. Cases of tenant fraud, such as false references or stolen identities are on the rise and can lead to costly legal and operational issues. Integrating robust verification tools into your agency’s workflow helps mitigate this risk and ensures a safer rental process.

What the AML process involves

One of the central components of AML compliance is customer due diligence (CDD), which involves verifying clients’ identities, understanding the source of funds and monitoring for red flags throughout the transaction process.

The AML process in estate agency revolves around three core pillars: verifying identity, understanding the source of funds and maintaining robust, ongoing oversight.

Verifying client identity (KYC)

Know your customer (KYC) is the first and most familiar part of AML compliance. It involves verifying the identity of individuals or businesses involved in a transaction.

For individuals, this means collecting and checking:

• A government-issued photo ID (e.g. passport or driving licence)
• Proof of address (e.g. utility bill, bank statement)

For corporate entities or trusts, agents must go further, identifying directors, ultimate beneficial owners (UBOs) and the company’s registration details.

Understanding the source of funds

Beyond identity, agents must ensure the source of funds for the purchase is legitimate. This includes assessing whether the funds are consistent with the client’s known profile and income level.

Supporting documents may include:

• Bank statements
• Sale proceeds from another property
• Inheritance documents
• Business income verification

If the source of funds appears unusual or inconsistent, this could trigger a suspicious activity report (SAR) submission to the National Crime Agency (NCA).

Ongoing monitoring and record keeping

AML compliance doesn’t end once a client’s identity and source of funds have been verified. Estate agents have an ongoing responsibility to monitor the transaction and remain vigilant for any signs of suspicious activity. This includes watching for inconsistencies in behaviour, sudden changes to documentation or unusual urgency, such as pressure to close a deal quickly or avoid standard procedures.

A key aspect of this stage is long-term documentation. Estate agents must retain all records related to AML checks for at least five years after the transaction has completed. This includes copies of identification documents, notes from conversations, risk assessments and any suspicious activity reports (SARs) submitted. These records must be securely stored but readily accessible in the event of an HMRC inspection or internal audit.

Equally important is the clear documentation of every step taken throughout the transaction. From the initial identity check to any follow-up questions or escalation actions, every interaction should be logged and traceable. This provides a complete audit trail and demonstrates that the agency has fulfilled its due diligence obligations.

It’s also essential to revisit and refresh checks if circumstances change. For example, if a transaction is significantly delayed or if new individuals become involved, the original verification may no longer be valid. In such cases, a fresh round of checks may be required to ensure continued compliance.

The overall approach should be risk-based. Higher-risk clients or transactions such as overseas buyers, politically exposed persons (PEPs) or cash-only purchases warrant enhanced due diligence and more frequent monitoring. By applying greater scrutiny where the risks are higher, estate agents can balance efficiency with protection, ensuring robust AML practices without unnecessary delays.

Tools and technology for AML compliance

Keeping up with AML requirements manually is increasingly impractical. That’s why many estate agencies are turning to digital tools to streamline and strengthen their compliance efforts.

Popular tools include:

• ID verification platforms such as SmartSearch, Credas or Thirdfort to automate document checks and facial recognition
• Risk assessment tools that flag high-risk clients and provide scoring frameworks
• Real estate CRMs that integrate AML workflows, communication logs and task management
• Document storage systems that ensure GDPR-compliant archiving and easy retrieval during audits

Using digital systems not only speeds up due diligence but also provides a robust audit trail that satisfies HMRC requirements.

How estate agency software helps with AML

Modern estate agency software offers built-in AML features that simplify compliance without slowing down the sales process.

Key benefits include:

Seamless ID verification
Direct integration with leading ID verification platforms allows agents to check documents in seconds, with results automatically logged against client profiles.

Audit trails and automated record-keeping
Every action, from KYC checks to document uploads and agent notes is timestamped and stored, providing the detailed records needed for HMRC inspections.

Time-saving workflows
Pre-built checklists and task reminders ensure no step is missed, while automation handles repetitive admin like client onboarding and file management.

Integration with sales processes
Because AML tools are embedded within the same system used for listing, offer negotiation and deal progression, agents can work faster without switching platforms or duplicating data.

Final thoughts on AML for estate agencies and how MRI Software can help

AML compliance is a legal necessity but it doesn’t have to be a burden. With the right tools and processes, estate agents can meet their obligations, protect their business from risk and provide a seamless experience for clients.

MRI Software’s estate agency solution includes the features needed to support AML compliance at every stage of the transaction. From automated workflows and real-time ID checks to centralised document storage and audit reporting, we help agencies stay ahead of regulatory demands while delivering great service.

Ready to reduce risk and simplify your compliance processes? Explore MRI’s estate agency software or contact us today to arrange a demonstration.

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