When should estate agents complete CDD?

To put it simply, estate agents must complete customer due diligence (CDD) on both sellers and buyers when the business:

• establishes a business relationship;
• carries out an occasional transaction amounting to a transfer of funds exceeding 1,000 euros;
• suspects money laundering or terrorist financing at a later date; or
• begins to doubt the veracity or adequacy of identification information.

The key here is to make sure you and all relevant staff understand when the business relationship is established.

When is the business relationship established?

HMRC’s Anti-Money Laundering Supervision: Estate Agency and Letting Agency Businesses guidance (HMRC sector guidance) states that estate agents enter into a business relationship:

• with the seller at the point the property is marketed
• with the buyer at the point an offer is accepted

Estate agents’ customer due diligence cannot be postponed until exchange or completion. By the time a property is marketed or a buyer’s offer is accepted, the legal obligation is already triggered.

Why timing matters

The National Risk Assessment of Money Laundering and Terrorist Financing 2025 highlights the property sector as one of the highest-risk environments for money laundering due to transactions that:

• involve large sums that can rapidly change hands
• are used in cases linked to corruption, sanctions evasion, fraud and organised crime
• include super-prime purchases

The NRA makes clear that this is an issue across the sector. For example, in super prime property “HMRC identified compliance breaches of varying severity in just over 50% of firms…21% related to CDD.”

Weak or delayed customer due diligence creates the opportunity for high-risk individuals can progress significant transactions before scrutiny occurs.

What HMRC will look at in an inspection

If timing is wrong, the breach occurs immediately and cannot be corrected retrospectively by collecting documents later. HMRC reviewers will compare:

• the date the agency agreement was signed
• the date the property was marketed
• the date the buyer’s offer was accepted
• the date verification actually took place

If the verification and risk assessment dates fall after any of these trigger points, the firm will be found non-compliant. Recent enforcement reinforces this: between October 2024 and March 2025, HMRC fined 194 estate and letting agents more than £1 million for AML failures, with CDD weaknesses a recurring theme.

How to build correct timing into your workflow

Most timing mistakes stem from treating customer due diligence as a commercial formality rather than a legal obligation. Building timing into your AML policy removes the pressure of managing CDD reactively. Good practice includes:

• Making ID verification and the client risk assessment a mandatory pre-listing step
• Requesting and verifying ID and completing the risk assessment before presenting the buyer’s offer, or immediately at acceptance before progressing anything further
• Training all staff so that everyone understands the timings and related processes
• Keeping an auditable record that’s date-stamped to show when each part of CDD was completed

Final thoughts

The timing of customer due diligence is not flexible. It’s a defined legal requirement that estate agents are expected to build into their everyday workflow. Completing CDD before marketing a property and before progressing an accepted offer protects your business, your clients and the integrity of the market. You must not forget that CDD includes an appropriate risk assessment on both the buyer and the seller. 

If you are listing properties or advancing sales without completed client due diligence, you are already outside the regulations. Consistent, timely verification is the easiest way to demonstrate compliance, and the first thing HMRC will look for when they review your files.