Tribunal cuts down estate agents’ Money Laundering Regs fine

14 Mar 2016

The First-tier Tribunal has reduced the fine imposed on a Leicestershire estate agency for breaches of the ‘know your client’ requirements of the Money Laundering Regulations 2007.  The original penalty of £169,652 was the largest ever imposed on an estate agency business under the Regulations.  Following an appeal hearing lasting 3 days, the Tribunal has reduced the penalty to £5,000.

The original penalty was imposed on the estate agency (Jackson Grundy Limited) by the Office of Fair Trading (OFT) in March 2014 as one of its last decisions prior to the transfer of all its functions to other regulators.  The OFT calculated the penalty amount under its ‘Interim Penalty Policy’ which set out a scheme for calculating penalty amounts, starting with a percentage of ‘relevant turnover’ at ‘Stage 1’, and subsequent stages at which other factors were taken into account.

A few days after the OFT took its decision, the OFT’s responsibilities for regulating estate agency businesses under the Money Laundering Regulations transferred to HM Revenue & Customs (HMRC).  The estate agency exercised its right to obtain a review of the decision by HMRC.  HMRC upheld the original penalty.  The estate agency then appealed to the Tribunal.

At the hearing before the Tribunal, both parties agreed that the Tribunal had jurisdiction to consider all the facts as it found them to be, and to decide whether the penalty amount that had been imposed was appropriate as constituting an “effective, proportionate and dissuasive” penalty, and to decide for itself what would constitute an appropriate penalty to meet the facts of the case.

A copy of the decision is available here.  (The Tribunal provides a summary of its reasons at paragraphs 3 and 4.)

Monckton barristers represented both parties: the Appellant was represented by Alan Bates, and the Respondent by Peter Mantle.