As agents become increasingly vigilant about Anti-Money Laundering regulations and engage third parties for compliance checks, frequently asked question arises: Is it OK to charge clients for AML?
Like other business functions, AML compliance incurs costs from technology, staff training, and operations like document verification and checks. Given this, it’s understandable that many agents might choose to pass these expenses onto clients.
Those partnering with Smart Compliance and introducing AML charges vouched for the ease of its implementation, facing no resistance from buyers or sellers. Listen to their experiences in the video below.
Sharp Rise in AML Charges:
Over Half of Agents Now Charge Purchasers, Smart Compliance Data Reveals
As agents grow increasingly vigilant of Anti-Money Laundering (AML) regulations and turn to third parties to carry out AML checks, a frequently asked question arises: Is It OK to charge your clients for AML? A February 2023 Estate Agency Today article highlighted that 28% of agents were contemplating or already implementing such charges. Seven months later, Smart Compliance reports an upward shift: 52% of their partnered agents charge both buyers and sellers, while 55% charge only purchasers.
Like any other business process, AML compliance comes with its own set of costs, whether managed internally or outsourced to an AML specialist. These can include technology expenses, investment in staff training to remain up to date with regulations, and operational costs associated with hours spent chasing documents, carrying out checks, and reviewing compliance packs. Given these costs, it’s not surprising that agents feel it’s OK to pass on this expense to clients, especially if it ensures an efficient and compliant property transaction.
Clients of Smart Compliance who’ve started charging for AML have vouched for the ease of its implementation, without any pushback from their buyers and sellers. The agents surveyed likened the process of charging for AML services to that of an Energy Performance Certificate (EPC) – it’s a legal requirement. Just as clients pay for an EPC when selling or renting their property, understanding its importance and legal necessity, they can be advised about the importance of AML services in a similar way.
Amy Shields, the Commercial Director at Smart Compliance, and a former branch manager, emphasises the strain of compliance costs on agents. She states, ” Agents can’t continue to cover every compliance cost. I view these expenses similarly to an EPC – it’s a legal requirement. Many agents we speak to are trying to cut or minimise costs related to their suppliers and ‘tech stack’ due to market changes. I love being able to help clients stay compliant without any additional business costs.”
Tips for Making the Change
For agents considering charging their clients for AML, here are some tips:
Be Transparent & Informative: Confidently explain the reason behind the charge, emphasising AML compliance as a legal necessity. Provide straightforward explanations on your website and in your agency terms to ensure complete transparency with both sellers and buyers.
Outline Requirements Early On: It’s always good to set expectations at the beginning of a transaction. This can be done by detailing the AML requirements and charges at the start of the client relationship.
Include Information on All Marketing and Correspondence: From valuation documents to online property listings, make sure AML charges are thoroughly documented. Incorporate marketing materials in valuation packs and distribute them during viewings to inform about your company’s compliance procedures.
Highlight the Benefits of Smart Compliance:
Using Smart Compliance? Highlight its unique client benefits. These include a complimentary 3-month Lifetime Legal membership, which includes: a standard or mirror Will, expert legal advice, and Mover Protection – allowing clients to potentially reclaim up to £2570 should their sale or purchase fall through due to no fault of theirs*.
In conclusion, introducing a new charge can initially seem challenging. However, as agents have discovered, it often just a case of a change in mindset and, much like discussing fees, having confidence in your professional service. Agents’ experiences show that with the right approach, clients not only understand but also appreciate the necessity of paying for AML services. Discussing AML isn’t about selling; it’s about informing and advising.
*t’s and C’s Apply