In a week where two more estate agents have been issued with fines for breaching the Anti-Money Laundering, Combatting the Financing of Terrorism and Counter Proliferation (AML/CFT) financing obligations, our minds are again turned to those agents seemingly happy to turn a blind eye while the rest of us strive to clean up our industry.
Gibraltar's legal framework and conveyancing practices are based upon (and largely similar to) UK law and while AML procedures in UK are stringently adhered to, some Gibraltar agents seem more reluctant. While there’s no excuse for not making the effort to verify identities of Ultimate Beneficial Owners (UBOs), it’s fair to say that there is more information readily available in the UK in order to do this.
In the UK for example:
1) When it comes to property held by (or bought by) Limited Companies, the UK's Companies House is free to search by anyone at anytime. Simply visiting the website and searching the company or director's name can give you free access to Certificates of Incorporation, filed accounts, and Persons with Significant Control. No registration required.
On the other hand, while information held at Gibraltar Companies House is (in theory) public information, carrying out a search on a company will involve registering on a complicated system and paying £22.50 per search. With many UBOs hiding behind a string of limited companies, each owned by the other, searching the entire chain of companies to identify the UBO is time consuming and costly, and it's easy to see why some agents won't bother.
2) Land Registry information in the UK is public information. For the princely sum of £3, you can download a time & date stamped 'live' title document, giving up to date information on the legal owner, when they acquired the title, how much was paid (if acquired after 1995), any charges held against the title and any further encumbrances.
In contrast, searching LPS costs £30 each time and the information is often a year out of date. Seeing a proof of purchase for the property is no more proof of ownership, than last month's Morrisons’ receipt for a packet of biscuits. It confirms previous but not current ownership.
So is there more HMGoG could be doing to help?
Undoubtedly providing the above information at the touch of a button would make information easier to obtain. Having said this, there would still be an administrative cost which would have to be picked up by someone. Whether it is in the interests of a community the size of Gibraltar to pick up the tab for this is doubtful.
One option would be a mandatory "AML Pack" that requires purchasing before a property is listed for sale, that would include all the required information. Similar to the UK's HIP that was introduced in 2004. Whether the cost of this is borne by the agent or the seller would be a bone of contention, but either way it would mean the information is there from the beginning.
A happy side effect of this would be the reduction in 'speculative' sellers 'testing' the market leaving seemingly unsellable properties cluttering the pages of propertygibraltar.com giving the impression of a 'slow' market.
An upfront cost would mean only motivated sellers are listing and a paid for, government-provided pack would mean some much needed funds in HMGoG's coffers.
Ultimately verifying clients for AML purposes is, quite rightly, the responsibility of the Estate Agent and it is possible if the agent puts the effort in. Quite rightly those who turn a blind eye should face the consequences. HMGoG's website easily links to UK, EU and UN sanction lists as a good example.
If you're considering selling or letting your property, don't get caught out. Ensure your chosen agent is RICS regulated, complies with NAEA regulations and has robust AML policies I'm place. The only way Gibraltar's property market will clean up its act is if consumers vote with their feet.