The property market can be a dangerous place. In a world where financial crime is both proliferating and becoming ever more sophisticated, the property sector is one of the most vulnerable to fraudulent activity. Whether you are a company dealing with individual lettings or sales, or managing commercial property deals, many of the issues are the same. From small-time fraudsters trying to obtain a rental agreement under false pretences, through to shell companies trying to gain a foothold in the commercial property market, there are a wide range of issues that need guarding against. Efficient KYC (Know Your Customer) and CDD (Customer Due Diligence) processes are the first steps in doing so.
AML (Anti-Money Laundering) rules are becoming more stringent, and with 6AMLD (6th Anti-Money Laundering Directive) being introduced, the defence of not being aware of criminal activity no longer applies. Companies and Individual Company Officers are subject to prosecution, including fines and imprisonment, if their company does not identify fraudulent activity taking place. So, the importance of KYC and CDD has now become personal!
Why is KYC Important for Property Firms?
Regulatory scrutiny in the property sector is greater than ever. Letting and estate agents are under increasing pressure to implement risk mitigation strategies to ensure they are compliant with a number of regulations relevant to their sectors. Issues such as Know Your Customer (KYC), Anti-Money Laundering (AML) and fraud detection are changing the face of businesses across the UK property market. For example, the 4th Money Laundering Directive (4MLD) brought in the requirement for money laundering checks to apply to both buyers and sellers.
So it’s no surprise that the lives of Estate Agents, Letting Agency Businesses and Managing Agents have become more complicated. What used to be viewed as a safe and simple market has now been increasingly tainted by UK and overseas criminals, who see the UK property market as an easy way to launder their ill-gotten gains. On an individual level, there have been strides made in our abilities to identify fraudsters, but at a company level it has taken longer for UBOs (Ultimate Beneficial Owners) to be identified accurately. Fortunately, legislation has caught up, making the situation easier to navigate.
When selling or renting a property to an individual, KYC identity verification must be carried out. Traditionally, a person would visit the branch and present their documentation for the Agent to verify. But times have changed. Customers now want to use remote verification techniques with easy-to-use digital solutions for speed and efficiency in onboarding.
The Challenge of KYC Real Estate
In this highly competitive sector, firms are facing increasing levels of risk. Likewise, fraud and money laundering worries abound as overseas buyers (individuals, companies, trusts) seek to invest in the UK property market, particularly in London. Thorough AML checks demand verifying all individuals and entities and understanding the ownership structures of the businesses making high-value transactions. These market conditions force UK property firms and proptechs to re-assess their due diligence practices. They are acutely aware of the need to demonstrate best practices when onboarding clients and to avoid the hefty fines (not to mention the damage to reputation) associated with non-compliance. Hence, they need to consider how they will put in place the processes and systems that comprehensively address current regulatory demands while offering the flexibility to meet new or future requirements.
Remote ID Verification for KYC Onboarding in Property
A whole range of documentation can be verified remotely, including passports, driving licences, identity cards, visas, birth certificates and more to provide personal and address verification. Coupled with biometric facial recognition, voice recognition, liveness detection and other anti-spoofing techniques, these give companies a wide armoury of tools for seamless KYC onboarding.
KYC onboarding doesn’t need to be a painful experience, and customers expect – especially since the advances made in digital technology since COVID-19 – to be able to translate their personal data into a positive decision very quickly.
Easy to Deploy Technology for KYC Onboarding in Property
Property firms must meet customer expectations and deliver modern software for KYC onboarding if they are to stay ahead of their competitors. The administrative burden also needs to be considered. Whilst manual admin is costly, more importantly, it is, by its very nature, subject to human and systems error, which can prove costly – both in terms of financial sanctions and legal prosecution.
Many companies find the move to a digital solution daunting: “What sort of implementation timescale are we talking about? Weeks? Months?” “What sort of downtime can I expect on my systems, and will it actually work?” “How will I convince my customers to engage with this software or download an App?”
It’s these types of concerns that software companies encounter all the time.
But the answers are simple.
No, it doesn’t take weeks or months; it’s often just a few hours at most.
No, you won’t have any downtime; it’s normally just a switchover.
More importantly, customers find it easy. As long as the customer has a device, such as a mobile phone, tablet, or computer with a camera and an internet connection, they can sign up immediately. KYC onboarding can then be achieved in just three easy steps: document verification, liveness check, and address verification by using the camera on their device. Customers find remote verification so easy, and costs are quickly saved against existing manual processes and resources. The back-end benefits and process gain for both your compliance team and your admin and sales teams can be enormous.
There are many software products on the market that can be used to digitise the processes involved, and NorthRow’s RemoteVerify for KYC property onboarding is one of the market leaders. Our software is kept up-to-date with the latest digital and biometric tools available, we have access to detailed UK and Worldwide databases and have an intelligence-sharing agreement with law enforcement agencies.
From KYC Onboarding Through to Ongoing Monitoring
But the job doesn’t end with the initial KYC onboarding. So much can happen throughout a client’s lifecycle that it is essential to have ongoing monitoring and remediation processes in place. Client Lifecycle Management (CLM) is a crucial part of any regulated entity’s operation and it’s an area where many have the most problems in sustaining. CLM can be viewed as an expensive ‘nice to have’, but it doesn’t have to be, and it definitely isn’t a ‘nice to have’. Not when considering the strength of sanctions, fines and potential prosecution that the latest legislation can wield.
Watch our RemoteVerify demo to learn how your property business can deliver seamless KYC onboarding.
How Has NorthRow Helped Estate Agency Businesses?
One leading UK property business is ahead of the curve, having already implemented a NorthRow solution to expedite their compliance processes nationwide. Aware of the growing need for compliance, they reviewed their processes and chose NorthRow as the partner to implement a flexible and configurable system across a large network of office branches.
Today, the business is running a fully customised solution that works across both the sales and lettings side of their business to manage AML and Right to Rent checks; helping reduce risk and improve their customer identification program and fraud detection. Previous manually intensive processes have been automated. The solution is built to specific requirements, including amended data sets and risk scorecards based on different use cases and a mix of individual and ID document checks. As part of the process, NorthRow stores details of the checks within the NorthRow console, time and date stamped, fully secure and encrypted, offering a fully transparent audit trail.
Why NorthRow?
NorthRow offers estate agents the ability to leverage leading-edge technology used by many of the UK’s top financial services companies, as well as best practices to ensure regulatory compliance. NorthRow also offers enhanced due diligence and the ability to expand existing practices to address new and emerging regulatory obligations. The due diligence practices within the property sector have traditionally been manual and slow. With NorthRow, an estate agent can perform real-time automated checks for a much smoother customer onboarding process. As well as doing everything in real-time to drive operational efficiency, it automatically stores all of the data, creating an audit trail with documents appended in a fully secure and encrypted manner.
The NorthRow solution adds rigour to existing regulatory background checks. It also gives savvy firms the scope to use a leading multi-source platform capable of carrying out complex checks on individual buyers, vendors, tenants, and companies to establish ownership structures and identify any beneficial owners. It brings operational efficiency, cost savings, compliance with anti-money laundering regulations and increased bandwidth to process more sales and improve customer experience, all in a single-point solution.
Ready to Invest in NorthRow?
No letting agency business or sales team should rely on manual processes in 2024. So if you are ready to safeguard your property business against financial crime and regulatory pitfalls, it’s time to elevate your compliance standards and streamline your onboarding process with NorthRow’s cutting-edge KYC solutions. Get in touch with us today to find out how we can set you up for success.
Last updated: Wednesday 29th May 2024
