Aipedia: Estate and letting agents

AI-driven AML and ID checks for estate agents

Aipedia, by the Apex broking team · Last reviewed 2026-10-27

Estate agents can use automated identity and AML checks, but the agent stays responsible for customer due diligence on sellers (TPO 5f) and buyers (TPO 9b). Property is an attractive route for laundering money and for identity fraud.

Part of: AI in estate and letting agents

In short

Electronic ID verification, document scanning, facial matching and AI risk scoring can handle much of an agent's customer due diligence. The TPO Code requires due diligence, and enhanced due diligence where appropriate, on the seller (5f) and the buyer (9b). Estate and letting agents not supervised by a professional body are supervised for anti-money laundering by HMRC under regulation 7 of the Money Laundering Regulations 2017. A tool that passes a forged document or impostor seller can expose the agent to claims from the true owner, the buyer or a lender. PI may respond to negligence claims, but fines usually fall outside cover.

How agents use AI for due diligence

Many agencies may run identity checks through an online platform. The seller or buyer uploads a passport or driving licence, takes a live selfie, and the system checks the document, matches the face and runs database, sanctions and politically exposed person screening. Some tools add AI risk scoring, read proof of funds documents and flag unusual source of wealth stories. The result is a pass, refer or fail, often with a report saved to the CRM.

These tools are good at what they are designed to test: whether a document looks genuine, whether the face matches and whether the name appears on a list. They are less good at the questions that matter most in property fraud. Is this person actually the owner? Why is a mortgage-free property being sold quickly by someone who lives abroad? Does the buyer's source of funds make sense? Those questions still need a person who understands the transaction, and a tool that returns "pass" can make staff less likely to ask them.

The duties that apply

TPO Code 5f: undertake customer due diligence, and enhanced due diligence where appropriate, on the seller.
TPO Code 9b: the same on the buyer when an offer is received.
TPO Code 1i: keep full written records for six years.
Money Laundering Regulations 2017: under regulation 7, HMRC supervises estate and letting agents that are not supervised by a listed professional body. GOV.UK guidance says records must be kept for five years from the end of the relationship or completion of the transaction.
TPO Code 1h: confidentiality and data protection for identity documents and biometric data.

The due diligence clauses are in the TPO Code (March 2026 edition).

What can go wrong

A high-quality forged passport passes document checks.
An impostor "seller" of an empty or rented property clears ID because the fraudster holds genuine stolen documents.
A "refer" result is overridden by staff under time pressure.
Source of funds is accepted on an AI summary without the underlying documents.
Records are held only in a supplier platform and lost when the contract ends.

Illustrative: an agent markets an unencumbered rental property for a "seller" who passes an automated ID check with a convincing forged passport. The agent does not check ownership details against the seller's address history, and a sale proceeds. The true owner discovers the fraud. Claims follow from the true owner and the buyer's side, and the agent's supervisor asks for its due diligence records.

How PI usually responds

A civil claim alleging that the agent negligently failed to identify a fraudulent seller will usually be considered under the PI policy, subject to its terms. Points to check include fraud and dishonesty exclusions, aggregation of related claims and whether the limit is per claim or in the aggregate. Penalties imposed by a supervisor are commonly not insurable. Losses from the agent's own funds being stolen may fall under crime or cyber cover rather than PI; see social engineering and fund transfer fraud and fraud aggregation in property PI.

Practical controls

Treat every "refer" result as a hard stop for a named compliance person.
Check ownership against title for all sellers, with extra care on empty, rented or mortgage-free properties.
Read source of funds documents rather than relying on summaries.
Export and keep reports in your own systems for at least the required periods.
Document why the tool is reliable and what it does not check.
Train staff on fraud indicators the tool will not see; see AI call recording for keeping offer records.

How Apex helps: Apex arranges PI for estate agents and can review how fraud-related claims are treated in your policy. See AI in estate and letting agency and does PI cover AI errors.

Sources

Frequently asked

Can estate agents rely on electronic ID checks for AML?

Electronic checks can form part of customer due diligence, but the agent remains responsible for doing it properly. TPO 5f and 9b require due diligence on sellers and buyers, with enhanced checks where appropriate.

Who supervises estate agents for anti-money laundering?

Under regulation 7 of the Money Laundering Regulations 2017, HMRC supervises estate and letting agents that are not supervised by one of the professional bodies listed in Schedule 1 to the Regulations.

How long must AML and offer records be kept?

The TPO Code requires full written records for six years (1i). GOV.UK guidance says Money Laundering Regulations records must be kept for five years from the end of the relationship or transaction. Keeping them for six years covers both.

Does PI cover an AML fine?

Usually not. Regulatory fines and penalties are commonly excluded or uninsurable. A civil claim from a defrauded owner or buyer is more likely to be considered under PI, subject to the wording and any fraud exclusions.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.