Time is running out for Royal Institution of Chartered Surveyors (RICS) members and other stakeholders to have their say on RICS’ proposed second edition of its Countering Financial Crime Standard (Proposed Standard).
At a high-level the Proposed Standard includes changes relating to:
- the emergence of artificial intelligence (AI);
- risks associated with bribery and corruption;
- the increasing presence and use of digital currencies; and
- changes as to the material that poses money laundering risks.
Consultation on the Proposed Standard is currently open and will close at midnight tonight (22 April 2025). A copy of the Proposed Standard can be accessed on the RICS’ consultation webpage, and feedback can be provided by way of comments and answering a questionnaire.
What changes are being proposed?
The Proposed Standard, the full name of which is the Countering Financial Crime Standard: Bribery, Corruption, Money Laundering, Terrorist Financing and Sanctions Violation Professional Standard, proposes changes to the first edition of the Countering Bribery, Corruption, Money Laundering and Terrorist Financing Standard, which was released in 2019. Some of the changes included in the Proposed Standard are summarised below.
Artificial Intelligence
The Proposed Standard encourages RICS-regulated firms to consider how the use of AI may assist their customer and broader due diligence processes, assist in undertaking identification checks during transactions, and enhance operational efficiencies. There is however an acknowledgement that the adoption of AI may not be suitable for all firms, with cost and resource circumstances being relevant considerations. Relatedly, RICS is currently undertaking a consultation in respect the proposed Responsible use of AI Standard 1st Edition, with that feedback window closing on 29 April 2015. It is likely that, once implemented, both standards will need to be considered alongside each other to ensure that RICS-regulated firms and members effectively and legitimately adopt the use of AI whilst also addressing the risks that this poses.
Bribery and corruption risks
Section 2.1 of the Proposed Standard provides more focused information in respect of bribery and corruption risks, than that contained in the current standard. This includes the express identification of the following activities as ones which may assist with educating relevant people about bribery and corruption risks:
- regular employee training sessions;
- the implementation and maintenance of policies and procedures; and
- the completion of a bribery and corruption risk register, and a record of what risk mitigation measures have been identified during that process.
Digital Currencies
In respect of digital currencies, the Proposed Standard (at section 3.3) recognises that real estate is increasingly being paid for by these means and proposes to introduce a requirement that RICS-regulated firms must complete ‘enhanced due diligence when there is a request for funds to be paid in this way.’ What is required by enhanced due diligence is further set out at section 5.1.2 of the Proposed Standard. In the context of real estate transactions involving digital currencies, it is set to include the verification of the source of these funds, compliance with applicable regulations and the transaction’s legitimacy.
Other matters
In terms of other changes, the Proposed Standard:
- expressly highlights that the use of gold and timber is increasingly present in money-laundering practices; and
- proposes changes to some defined terms.
Why is this important?
First, there have been significant advancements in technology since the first edition of this standard was released in 2019. The evolution of AI and its increasing prevalence in workplaces is perhaps the most obvious of these advancements – with the current standard not expressly referring to AI at all. Considering the importance of mitigating the risks of financial crime, it is important that applicable standards reflect the changing areas of risk, and appropriate response measures, that have arisen since 2019.
Second, as those who will be regulated by the Proposed Standard once it is implemented will appreciate, it is important that the updates recognise and respond to the practical realities of RICS-regulated firms and members. One way for this to be achieved, is for those firms and individuals to provide feedback during this consultation window.
Third, whilst changes may be made to the current form of the Proposed Standard following RICS’ consideration of feedback received during the consultation period, the current draft does provide insight as to the areas of change that are front of mind. This provides a good opportunity for RICS-regulated firms to start reviewing their own policies and procedures, and identify any potential deficiencies and solutions. With the Proposed Standard to become effective three months after publication, holding off on conducting this review until the Proposed Standard is finalised will mean that there is a limited window for the implementation of any required changes.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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