Case Study: Preventing Financial Crime

Money laundering destroys value. It facilitates economic crime and nefarious activities such as corruption, terrorism, tax evasion, and drug and human trafficking, by holding or transferring the funds necessary to commit these crimes. It can be detrimental to an organisation’s reputation – and its bottom line.

The Money Laundering Directive sets out tough challenges for companies operating in markets vulnerable to money laundering and terrorist financing. The property market is a target for financial crime; estate agents are under increasing regulatory scrutiny and must work hard to avoid intervention, fines and reputational damage.

This case study captures the actual experiences faced by one of the UK’s largest estate agents as they tackle financial crime whilst under intense regulatory scrutiny.

The Client

An international estate agency business (EAB), head quartered in London and operating across an extensive branch network both at home and abroad. This client provides a mixture of residential, commercial, capital markets and acquisition services and was subject to intrusive oversight by the regulator.


In 2014 HMRC took responsibility for the supervision of Estate Agency business and heightened regulatory standards are driving sharp increases in enforcement action. Supervisory visits began by reviewing the business model and examining the systems and controls for anti-money laundering (AML) and counter financing of terrorism (CFT). The initial visits to both the head office and branches found multiple regulatory failings in both the centralised provision of policies as well as the procedures applied at the branches.

In response to this the firm undertook a series of actions to review and improve their processes and procedures.

MLD has been out there long enough; we will be issuing fewer warnings and more penalties from now on.” Senior Supervisor HMRC

A year later HMRC conducted a series of unannounced branch visits to follow up on the its previous findings. Once again, they found several regulatory breaches, including many in the same areas. This was brought to the attention of the central compliance function with a formal notice of expected remediation actions and a significant fine for non-compliance.

At this stage the Firm realised a more decisive approach was required and initiated a series of actions to address the regulatory findings.

A key part of this response was to engage the help of Lysis Financial to provide expert advice and resources to support a transformation as well as build a team to remediate the full client file backlog.

  • Intrusive regulatory oversight by a regulator flexing its muscles
  • Operating in an market, attractive to and targeted by money launderers
  • Develop a risk aware culture in a deal focused team
  • Instil discipline in client facing departments to ensure CDD take precedence over marketing
  • Spot suspicious behaviour
  • Develop risk appetite and risk based approach
  • Develop up-to-date policies and procedures
  • Build a centralised CDD team to clear backlog and process new instructions

Keeping one eye on maintaining a competitive edge and the other on preventing financial crime


Lysis was engaged to lead the Risk and Compliance team as they overhauled the Firm’s approach to meeting the challenges of financial crime regulation.

Lysis ran three main work-streams, providing:

  1. Operational resource and expertise to run the CDD team.
  2. Specialist risk & compliance advice and change management resources to review and enhance the policies and procedures.
  3. Project lead and advisory services to lead the response to HMRC.

Lysis began by fully reviewing and analysing the findings and recommendations from the previous supervisory visits. Using Lysis’s extensive experience of regulatory responses, we built a focussed programme of work to address each point, ensuring that in each case the solution provided was actionable, embeddable and sustainable.

By extracting each point and observation from HMRC’s feedback, merging all prevailing legislation and utilising its pre-built MLD and HMRC templates, Lysis conducted its rules mapping exercise. The output of this linked the complete Third Money Laundering Directive to the existing EAB to produce a matrix of all applicable rules and guidance. The purpose of this was to map each applicable regulation to the organisation’s operational and governance functions, identifying where there was weak or noncompliance. The results supported the formation of a resolutions roadmap, which drove the resulting work streams.

A rapid tactical response to the situation meant that Lysis was delivering value from day one.

A key strategic decision to centralise the customer due diligence process and build a dedicated team was led operationally by a specialist AML operations manager. Lysis then provided analysts to clear the backlog of cases, whilst ensuring that all new instructions were processed without delaying fee earners from engaging in business. The analyst team has the flexibility of being increased or reduced in size almost immediately, giving our client the agility to meet seasonal or other demands with minimal risk, complexity and in a most cost effective way. A rapid tactical response to the situation meant that Lysis was delivering value from day one.

Following the rules mapping and establishing a CDD team, the next step was to conduct a full review and enhancement of all financial crime policies and procedures. Workshops were run with key stakeholders to get to the DNA of the business and map the risks it faced in pursuit of its strategy. The outcome enabled Lysis to work to produce a Risk Framework, including a Risk Appetite statement and Risk Assessment that aligned with both regulatory and business priorities.

A clear roadmap and project reporting provided the basis for complete transparency within the business and key updates to HMRC, prior to a recent supervisory visit. During this latest visit, HMRC’s supervisory team consisted of four people. The depth of information and updates that our client was able to provide demonstrated not just an understanding and grip of the challenges, but a complete and sustainable solution the was deemed entirely satisfactory, resulting in no further questions from the supervisory team.

Lysis implemented to following critical components to enable assurance of full compliance:

  • Financial crime rules mapping exercise
  • Business workshops and development of a Risk Appetite and statement of the Risk-based approach
  • Full policy suite review and development, captured in a financial crime compliance manual
  • Provided expert KYC and AML analysts
  • Provided an interim operations manager to oversee the file remediation and new client take-on as well as leading the transformation to a centralised CDD team
  • Risk and control self-assessment procedure for ongoing monitoring of the systems and controls, demonstrating and maintaining compliance with existing and upcoming money laundering regulation
  • Support and guidance for packaging and submitting updates to the regulator as well as accompanying the client at supervisory meetings and reviews.


Of the following benefits the most important has to be that this Estate Agency business could now be assured that it was not only complying with the rules and regulations, but that it had implemented a best in class solution that would provide a competitive advantage and protect it from future changes.

  • Fully mapped business operations from money laundering regulation to operational systems and controls.
  • Embedded and sustainable operational money laundering policies and processes.
  • Clear risk-based approach to managing even the most complex client structures
  • An experienced CDD team capable of reacting rapidly to surges and demands of a seasonal business
  • Incredibly agile and responsive CDD team to meet seasonal or other complex demands

Not least of course is also that this firm now has a sound footing and strong relationship with HMRC, who can now have complete confidence that that the organisation is firmly on the front foot and able to protect against financial crime.

As part of an ongoing supervisory process this firm as well as all its peers, will be subject to both announced and unannounced supervisory visits. We are confident that HMRC will now be entirely satisfied with the operations and ongoing compliance with the Money Laundering Directive and associated legislation.


For the past 15 years, Lysis Financial has helped businesses reduce their operational losses, reduce the cost of borrowing and free up regulatory capital. Lysis embeds a risk-based strategic approach into its projects and operational decision-making, enabling our clients to be assured of sustainable success.