This document sets out the policy and procedures that The King’s Cross Group has adopted to comply with the relevant laws and industry guidance for money laundering, terrorism financing and sanctions, including the relevant provisions of the Proceeds of Crime Act 2002, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended from time to time) (“MLR 2017”) and the Sanctions and Money Laundering Act 2018 (“SAMLA 2018”). It complies with the HM Revenue and Customs’ (“HMRC”) guidance ‘Anti-Money Laundering Supervision: Estate Agency Businesses” effective from 10 January 2020.
It is essential that our business and its employees comply with the letter and spirit of this policy as failure to do so could be a criminal offence, which could carry a prison sentence and/or a fine.
Money Laundering and Sanctions - Estate Agency and Letting Agency Businesses
Background to money laundering
The MLR 2017 require businesses at risk of being used for money laundering by criminals and terrorists to have controls in place to minimise the risk of this happening. Money laundering is the process by which criminals change money and other assets generated from criminal activity into "clean" money or assets that have no obvious link to their criminal origins and appear legitimate. Investing money which originates from crime, for example buying or letting property using 'dirty' money, is also a money laundering offence. Terrorist financing includes providing, receiving or collecting funds, from legitimate or illegitimate sources, for the purposes of terrorism.
Criminal activity which can result in 'dirty' money which is laundered/invested can take many forms, including:
Certain businesses, including estate agents and letting agents of residential and or commercial property, are regarded as being vulnerable to attempts by criminals to launder money, and as having an important role to play in combatting money laundering. They are therefore required to take specific anti-money laundering ("AML") compliance steps.
Background to sanctions
Sanctions refers to a range of political, trade, or financial/economic measures implemented against target countries, groups, and individuals for specific purposes such as foreign policy or counterterrorism. Sanctions are established by international bodies like the UN or EU, or originate from individual countries e.g. UK or US. Sanctions impose prohibitions and requirements on the targets directly, as well as on third parties who engage in trade or dealings with them.
SAMLA 2018 is the UK’s primary sanctions legislation. This allows the UK to impose financial and other sanctions, and money laundering and terrorist financing regulations, following the UK’s exit from the EU. Sanctions laws in the UK are currently contained within different pieces of legislation. The sanctions restrictions most relevant to KCGM are supervised and enforced by both the Office of Financial Sanctions Implementation ( “OFSI”) and HMRC. An individual or entity listed under UK legislation as being subject to sanctions is referred to as a “Designated Person”.
The most relevant type of sanctions to KCGM are financial sanctions. Financial sanctions restrict the provision of funds, economic resources, and certain services to certain entities or individuals (Designated Persons). They also restrict the use of assets by Designated Persons, and if a relevant person controls or receives funds or economic assets belonging to a Designated Persons, they should be frozen.
UK financial sanctions apply to all persons within the UK and to all UK persons, wherever they are in the world. It is also broadly prohibited to engage in any activities the object or effect of which is to circumvent sanctions. Breach of financial or trade sanctions law is a criminal offence punishable by imprisonment or a fine, or both.
OFSI also has the power to impose fines on a strict liability basis – that means that an individual or a firm can be held liable for making funds or economic resources available to a Designated Person (or dealing with the resources of a Designated Person) without OFSI needing to demonstrate that the individual or firm knew, or even suspected, that they were breaching the sanctions regime.
Regulated activities
The King’s Cross Group Management Limited (“KCGM”) as an estate agent and letting agent
Many activities of KCGM’s sales and lettings team on residential and commercial property (such as sending out property details, answering questions from potential buyers or tenants, arranging viewings, negotiating sales and tenancies and taking reservations and reservation fees and entering heads of terms) constitute carrying out ‘estate agency work’ or ‘letting agency work’ as defined in the Estate Agency Act 1979. These requirements apply even though KCGM’s sales or letting team is in-house and selling or letting properties developed by The King’s Cross Group LP (“KCGLP”) or its subsidiaries/associates. As KCGM employees carry out sales and letting activities on behalf of these entities, KCGM is deemed to carry out regulated estate agency and letting agency activities and must comply with the requirements of MLR 2017 and SAMLA 2018. KCGM also requires any sales or letting agents acting on its behalf to comply with MLR 2017 and SAMLA 2018.
Risk Assessment
KCGM has carried out a Money Laundering, Terrorism Financing and Sanctions risk assessment in respect of its activities.
This risk assessment considers the risk indicators within the sector and are reviewed and updated annually (or sooner in the event of major changes which are likely to affect the business' AML or sanctions risk).
We have and continue to communicate details of any type of business which we will not accept to our employees.
Registration
It is an offence for a business to carry out estate agency work or letting agency work unless it is registered with HMRC for AML Supervision and complies with the requirements of the MLR 2017. KCGM is registered with HMRC for AML Supervision.
We are committed to complying with all applicable AML and counter terrorist financing and sanctions laws and regulations.
The aim of this Policy and Procedures document is to ensure that we take appropriate steps to know our 'customers', to verify that they are who they say they are, and to identify and assess (and if appropriate, report) any money laundering or sanctions indicators. Ultimately, our aim is to seek to ensure that our business is not used for fraudulent, money laundering or terrorist financing activity or in breach of sanctions.
This document sets out our Policy and Procedures for Customer Due Diligence. As KCGM only sells or lets properties developed by KCGLP, its subsidiaries or associated entities, there are no third-party vendors on which it is required to carry out customer due diligence. Our Policy and Procedures for Customer Due Diligence therefore focus on purchasers or persons taking leases of residential properties or commercial properties.
Prior to establishing a business relationship with a potential buyer or tenant, we ensure that the buyer or tenant is known to us and satisfies our customer due diligence checks. We employ Veriphy, third-party suppliers of customer due diligence checks, to carry out specific checks (including sanctions screening) using their online platform. These tools are part of the wider customer due diligence checks, that we carry out for every purchase or letting. The checks that we carry out are tailored to the nature of each transaction and the associated risks as set out in this Policy and the Handbook.
We also verify the “source of funds” for each purchase and all relevant lettings. The source of funds is the origin of the funds that will be used to purchase or take a lease of the property. It refers to the activity that generated the funds (for example, a mortgage, or salary payments, or sale proceeds), as well as the means through which the funds will be transferred (e.g., a payment from an account in the purchaser's or tenant’s name). The "source of wealth" describes how a customer or beneficial owner acquired their total wealth.
We have processes in place to appropriately identify transactions that pose a higher risk of money laundering and terrorist financing. We take enhanced due diligence measures and apply enhanced ongoing monitoring to high-risk transactions.
We require all employees and agents instructed on behalf of KCGM to report any suspicious activity to the KCGM Money Laundering Reporting Officer (“MLRO”).
Procedure for Lettings Agency Work
Commercial Lettings
Our Money Laundering and Terrorist Financing and Sanctions risk assessments identify that our office/investment letting transactions fall within a low-risk category. Further, relatively few of our retail letting transactions fall within the remit of the MLR 2017 (due to the monthly rental threshold). We engage experienced and reputable lettings agents, registered with the Royal Institute of Chartered Surveyors.
We ensure that our lettings agents conduct appropriate checks at Heads of Terms stage across all transactions to ensure that we can identify any potential money laundering or terrorist financing or sanctions risks at an early stage. We monitor our retail and office /investments lettings agents’ processes on an ongoing basis and conduct an annual review process with them. Additionally, each commercial transaction is to be signed off by KCGM’s MLRO prior to Heads of Terms or contracts being signed to ensure that the agents are performing their responsibilities in line with the Policy.
We aim to make our procedures easy for our staff to comply with. We have compiled a detailed Handbook on our AML and Terrorist Financing and Sanctions Procedures for Customer Due Diligence (“Handbook”). The Handbook provides practical guidance on carrying out customer due diligence checks fully and accurately. The Handbook is at Appendix 1 and comprises:
The Handbook also provides details of acceptable POI and POA documents for use when completing the Checklists, a summary of 'red flags' relevant to estate agency and lettings agency businesses which may raise suspicion, a list of high-risk countries, and a template Money Laundering Report Form.
Ongoing monitoring
We are required to apply "ongoing monitoring" to our 'customers' (and in the case of high-risk cases, enhanced ongoing monitoring to complement our enhanced due diligence). The aim of ongoing monitoring is to ensure transactions are consistent with what we know about the customer, and to keep our customer due diligence up to date (in particular, if factors relevant to our risk assessment change, such as a change in beneficial ownership of company).
During the course of a transaction, employees must remain alert to transactions which are not consistent with what we know/expect about the customer. This would include, for example, receiving payments from unexpected/unexplained third-party sources.
In practice, we will not have an ongoing relationship with our 'customers' (purchasers and tenants) after they buy or take a lease of a property. Where a customer makes a further purchase, we will carry out full customer due diligence checks again.
Record keeping and Storage
The Handbook sets out our specific procedures for record-keeping and storage. We are required to keep records of the customer due diligence we have conducted, and any transactions carried out with the purchasers and tenants for 5 years from the end of the transaction. This is done by filing the relevant documents in KCGM’s secure electronic CRM system.
Our records are held securely and electronically for 5 years from the date of the transaction on the CRM system. Our staff will ensure that all photographed, photocopied or scanned identification records are disposed of in a secure manner and/or stored in secure lockable filing cabinets in line with the Data Commissioner’s guidelines found at https://ico.org.uk/for-organisations/guide-to-data-protection/
We will only process personal data obtained under MLR 2017 for the purposes of preventing money laundering and terrorist financing or where the use of the data is permitted by other legislation or after obtaining the consent of the individual.
Identifying and Reporting Suspicious Activity
The Handbook provides guidance on what constitutes “suspicion” and reporting suspicious activity. The first action by any staff member who suspects suspicious activity is to escalate the matter to the MLRO. A specimen Money Laundering Report form is included in the Handbook.
Under no circumstance should any of the parties be informed before, during or after any investigation, whether formally reported or not. ‘Tipping off’ someone that a suspicion has been raised may constitute a criminal offence.
The MLRO should assess any report and decide whether to escalate the matter, including whether to file a Suspicious Activity Report under the Proceeds of Crime Act or the Terrorism Act.
If a staff member becomes aware or suspects that a prospective purchaser or tenant is on the UK Sanctions List, this should be escalated to the MLRO immediately. The MLRO will advise on next steps with the prospective purchaser or tenant and will make any reports to OFSI as may be required.
We fully train staff when they join one of the relevant teams in the company. Our staff will receive training at least every two years and training will be specifically reviewed when staff change roles within the company. The ongoing monitoring of training records enables us to assess whether there are training shortfalls and to evaluate the effectiveness of training given to staff. All of our staff have been informed that they must report any suspicious activity to the MLRO, who has full autonomy to carry out their duties.
Staff Personal Liability
Our staff are familiar with our Policy and Procedures for Customer Due Diligence and of their personal responsibility and liability within MLR 2017 and SAMLA 2018.
All staff have been informed that they carry personal liability, and that they may be committing a crime, if they do not comply with our Policy and Procedures Customer Due Diligence, which supports the legal obligations. All staff have been informed that they could incur fines and/or a prison term for breaches of MLR 2017 or SAMLA 2018.
It is important that all staff read, understand and implement the Policy and Procedures for Customer Due Diligence and they will be provided with regular training on AML and sanctions.
Senior Managers
Our senior managers have been informed that they are personally liable for their own conduct and that of the staff employed by the company, or anyone representing the company.
Our staff and senior managers have been made aware that they must report any suspicious activities during the transaction process.
Reviews and Controls
It is our policy to monitor and review the success of our AML and sanctions controls at least annually. The MLRO conducts this review.
Last updated
01/09/2025 (Policy Published)