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Corruption and Money Laundering, A Victimless Crime?

16th August 2019

Categories: Latest News

In the last few years I have become more aware of how money laundering, fraud and corruption is hurting real people.  I have heard people describe these acts as financial crimes with no real victim or cost.  This is often on the assumption lost money will be paid back through an insurance claim. Doing just a little bit of research it is very clear the sophistication and technology utilised by financial criminals is cutting edge.  Millions of pounds is funnelled through the financial banking systems, through thousands of transactions each year across the world.  But does this have an impact on me directly, TDA or Torbay Council?  Well maybe it does, am I aware and what can I do about it?

Clearly technological advances can help prevent crimes but it is imperative public and private sector organisations work together, exchanging information and harness expertise to help prevent financial crime.  I am pleased to read HM Government, through its Flag It Up campaign is working with accountancy, legal and property sectors to promote best practice in anti-money laundering compliance and reporting suspicious activity.

However, a recent HM Treasury report stated the government is unable to give a precise figure of scale of the problem and identified a particular concern with property transactions and company formation.  Property and Commercial agents have been criticised in the past for not doing enough to prevent the proceeds of corruption being used to buy UK property.  HMRC recently announced it had carried out spot checks on 50 estate agents across the country and had levied a significant amount of fines to offending companies in breach of money laundering regulations.

To help combat the proliferation of financial crimes through UK property transactions the Royal Institution of Chartered Surveyors (RICS) has recently issued a new RICS professional statement on countering bribery and corruption, money laundering and terrorist financing.  The Statement is effective from the 1st September 2019.  Adoption of the Statement will be a mandatory requirement for all RICS Members.    The proactive approach taken by the RICS is really welcome across the real estate profession.  The measures to be implemented through the adoption of the Statement will help increase transparency, reduce risk and promote trust.

The Professional Standard can be found on the RICS website.  I thought I would however take the opportunity to summarise some of the guidance to provide a flavour of the advice and mandatory requirements for RICS Members.   The Standard is divided into three parts. 

  1. Mandatory requirements for anti-bribery and corruption and for anti-money laundering and terrorist financing.
  2. Guidance setting out supporting good practice.
  3. Supplementary guidance on some of the concepts described in Parts 1 & 2.

There is a distinction made between RICS regulated firms and RICS Members, but in essence all Members must ensure they have systems in place and training to comply with the laws, report any suspicions of money laundering to the relevant authority, use reliance only where there is an appropriate level of confidence in the quality of information provided by the third party and   understand the nature of transaction being made.

Bribery is equally a concern and RICS Members should declare certain items to an employer including receiving gifts, hospitality, entertainment and expenses.

Clearly the level of risk needs to be considered.  The supplementary guidance suggests risks should be broken down in risk register and categorised.  If this exercise once undertaken gives rise to very low risk to bribery then processes require less controls.  Simple and regular reminders to staff of what is acceptable on gifts and set limits so that all staff are aware of what is appropriate level of hospitality.   The other advice is knowing the 3 w’s, who you act for, what are you doing and why are you being asked do something, will protect you from inadvertently facilitating financial crimes.

Paul Palmer, TDA Head of Assets and Facilities Management, can be contacted on paul.palmer@tda.uk.net

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