Operation Machinize 2, conducted by the National Crime Agency throughout October 2025, targeted 2,734 high street businesses across the UK, resulting in 924 arrests and the seizure of over £10.7 million in suspected criminal proceeds. The operation exposed how criminal enterprises use apparently legitimate commercial premises as fronts for money laundering, drug dealing, illegal working, and modern slavery.
For estate agents handling commercial property lettings, sales, and leasehold transactions, these enforcement results should serve as a stark reminder: the businesses you help establish in commercial premises may not be what they appear to be. And your involvement in facilitating those transactions, however inadvertent, carries significant regulatory and reputational risk.
While residential property transactions have rightly been treated as high-risk under the Money Laundering Regulations 2017, the commercial property sector presents equally significant, and often more complex, money laundering vulnerabilities that agents cannot afford to overlook.
What Operation Machinize Revealed About High Street Businesses
Operation Machinize 2 involved every UK police force and Regional Organised Crime Unit, working alongside Home Office Immigration Enforcement, Trading Standards, HMRC, and Companies House. The scale of criminality uncovered was substantial:
- 70kg of cannabis removed from premises
- 111,097 illegal vapes seized
- 4.5 million illegal cigarettes and 622kg of illegal tobacco (representing £3.4 million in evaded duty taxes)
- 341 Referral Notices issued for illegal working and renting (businesses facing fines up to £60,000 per worker, landlords facing fines up to £20,000 per tenant)
- Over 450 companies referred to Companies House for further investigation
Rachael Herbert, Director of the National Economic Crime Centre at the NCA, made the government’s position clear:
“Operation Machinize targets businesses on our high street that are being used as cover for a wide range of criminality, making our communities less safe and less prosperous.”
Senior Lead for Machinze 2 at the NCA, Sal Melki, added:
“While there is organised crime occurring at the top of the pyramid, we do not underestimate the aggregated effect that thousands of shops engaged in so-called lower level criminality is having on our communities and the criminal supply chains that profit from them.”
Why Commercial Property Agents Are in the Firing Line
Estate agents are inevitable gatekeepers in commercial property transactions. When a business wants to establish operations in a retail unit, office space, or industrial premises, they typically engage an estate agent to identify suitable properties and facilitate the transaction.
This places commercial property agents in a critical position: you are often the first professional with an opportunity to assess whether a prospective tenant or buyer presents money laundering risks.
The Money Laundering Regulations 2017 recognise this reality. Estate agents are supervised businesses under the regulations, with specific obligations to:
- Conduct customer due diligence on clients
- Assess and manage money laundering risks
- Report suspicious activity to the National Crime Agency
- Maintain records of transactions and due diligence procedures
- Provide AML training to staff
These are not optional administrative requirements. They are legal obligations backed by criminal and regulatory sanctions. And enforcement authorities are increasingly willing to pursue estate agents who fail to meet these standards.
The Cash-Intensive Business Threat
Operation Machinize specifically targeted businesses that use cash transactions as a means of laundering criminal proceeds. The sectors most commonly involved, many of which operate through leased commercial premises, include:
- Barber shops and hairdressers: Frequently raided during Operation Machinize, these cash-intensive service businesses provide ideal cover for money laundering due to their legitimate high customer turnover and cash payments. Commercial property agents have facilitated thousands of such lettings across the UK.
- Vape shops: The seizure of over 111,000 illegal vapes during the operation demonstrates both the scale of illicit trading and the criminal networks operating through leased retail premises.
- Car washes: Hand car washes have long been identified as high-risk for both money laundering and modern slavery exploitation. Many operate from leased commercial sites.
- Convenience stores and off-licenses: Cash-intensive retail with opportunities for illicit tobacco sales and other criminal activity, often operating through short-term commercial leases.
- Takeaways and restaurants: Food service businesses with high cash turnover and the ability to inflate declared transaction volumes, frequently operating from leased commercial kitchens and retail units.
- Nail bars and beauty salons: Service businesses where declared customer numbers are difficult to verify independently, commonly operating from leased premises in shopping centres and high streets.
When commercial property agents facilitate lettings to businesses operating in these sectors, enhanced due diligence is essential, not just to satisfy regulatory obligations, but to protect landlords, the local community, and the agent’s own business from the consequences of inadvertent involvement in money laundering.
Customer Due Diligence in Practice
The Money Laundering Regulations 2017 require estate agents to conduct customer due diligence when entering into a business relationship. For commercial property agents, this typically occurs when taking on a letting or sales instruction from a landlord or vendor, and when facilitating a transaction with a prospective tenant or buyer.
Standard Customer Due Diligence includes:
- Verifying the identity of the client using reliable, independent sources
- Obtaining information about the purpose and intended nature of the business relationship
- Understanding the ownership and control structure for corporate clients
- Conducting ongoing monitoring of the business relationship
Enhanced Due Diligence is required when the estate agent identifies circumstances presenting higher risk of money laundering. This includes:
- Obtaining additional information about the client and beneficial owners
- Obtaining additional information about the source of funds and source of wealth
- Obtaining information about the reasons for the transaction
- Conducting enhanced ongoing monitoring
For commercial property transactions involving cash-intensive businesses or other risk factors identified above, enhanced due diligence should be standard practice.
FCA Supervision to Bring Further Scrutiny
With the Financial Conduct Authority (FCA) set to assume AML supervision responsibilities, the importance of robust, demonstrable CDD processes becomes even more critical.
The FCA’s supervisory approach is fundamentally different from professional body supervision. They expect evidence that your CDD processes work in practice, not just policies that look good on paper.
Regular CDD reviews, properly documented risk assessments, and clear audit trails showing when and why decisions were made will be essential.
Firms that have outsourced their CDD to specialists like RACO will be well-positioned for this transition. Our processes are already designed to meet the data-driven, outcome-focused standards the FCA will apply. Read our previous article for detailed guidance: ‘Preparing Regulated Businesses for FCA AML Supervision’.
Robust Customer Due Diligence Procedures
CDD is one of the first places supervision teams look, because it is easy to test. They will check whether you can show, for each relevant customer:
- what you collected (ID, ownership details, source of funds where relevant)
- how you verified it
- why you assessed the risk level the way you did
- when enhanced due diligence was triggered, and what you did next
If your business struggles with capacity here, or if due diligence is eating into fee-earner time, there is a practical alternative. RACO’s Due Diligence & Risk Assessment Service is built as an outsourced solution where we collate and verify KYC documentation, undertake CDD and EDD where needed, and prepare the transaction risk assessment report for your internal team to review and approve.
In other words, the work gets done properly, and your compliance function can focus on oversight rather than chasing documents.
Recording Your Decision-Making
Whatever due diligence you conduct, whatever concerns you identify, whatever conclusions you reach, record it all.
If you identify risk factors but get comfortable through enhanced due diligence, document what you did and why you concluded the transaction could proceed. If you identify concerns that give rise to suspicion, record what information led to that conclusion.
This documentation serves multiple purposes:
- Regulatory Defence: If your AML procedures are scrutinised by HMRC, clear records demonstrate you took obligations seriously and applied proper consideration to risk.
- Internal Learning: Recording decisions helps train less experienced staff and builds institutional knowledge about risk assessment.
- SAR Support: If concerns do reach the level requiring a Suspicious Activity Report, comprehensive notes provide the necessary detail for an effective report.
The absence of documentation is regularly cited in regulatory enforcement as evidence that proper procedures were not followed, even when firms insist they conducted adequate due diligence.
Filing Suspicious Activity Reports: Your Legal Obligation
When you know or suspect that a person is engaged in money laundering, or you have reasonable grounds for knowledge or suspicion, you must file a Suspicious Activity Report (SAR) with the National Crime Agency.
The 924 arrests and £10.7 million seizures during Operation Machinize were built on intelligence gathered from multiple sources, including SARs filed by estate agents and other professionals who identified concerning activity.
Filing a SAR does not mean you are accusing your client of criminality. It means you have identified circumstances that give you knowledge or suspicion of money laundering and are fulfilling your legal obligation to report those concerns.
Some commercial property agents hesitate to file SARs, concerned about damaging business relationships or losing instructions. However, failing to file a SAR when legally required can result in criminal prosecution carrying up to five years imprisonment.
The decision whether to investigate further rests with the National Crime Agency, not with you. Your responsibility is to identify and report knowledge or suspicion when it arises.
Where RACO Can Help Commercial Property Agents
At the Regulation and Compliance Office (RACO), we work with regulated businesses across the UK, including estate agents handling commercial property transactions. We understand the specific challenges commercial agents face and provide practical AML compliance support tailored to the commercial property sector.
We recognise that commercial lettings present unique risks compared to residential transactions. Tenants often operate in cash-intensive sectors. Source of funds for commercial property transactions can be complex. Determining when enhanced due diligence is required involves nuanced judgment calls.
Our services are designed to provide the specialist support commercial agents need without creating unnecessary administrative burden:
- Review AML policies and procedures to ensure they align with FCA expectations, especially around risk assessments and customer due diligence.
- Train your team to ensure staff understand the FCA’s approach to their obligations, including suspicious activity and reporting.
- Provide outsourced compliance services, including:
- Outsourced Due Diligence & Risk Assessment: We carry out the due diligence work and prepare risk assessments, so your internal team can focus on review and oversight.
- Anti Money Laundering (AML) Compliance Service: This support service has been designed to provide AML regulated businesses with an effective solution for the management and control of compliance with the Anti Money Laundering Regulations. Our service is an annual subscription that provides Businesses with ongoing support from our compliance team and ensures your Business has in place appropriate and compliant Policies, Controls and Procedures (PCP’s) that are maintained by us.
- Risk, Anti Money Laundering Guidance and Register Administration Service has been designed to provide Businesses and their Money Laundering Reporting Officer (MLRO) with a support function that ensures their regulatory and compliance obligations are fulfilled on an ongoing basis and staff are provided access to ongoing advice as needed.
Take Action Before Enforcement Arrives
The businesses raided during Operation Machinize did not appear suspicious on their face. They operated on high streets across England and Wales, leasing premises through legitimate commercial property transactions.
The challenge for estate agents is identifying which prospective tenants present money laundering risks and applying appropriate due diligence before facilitating those transactions.
This is not a problem that can be solved by applying generic procedures or hoping your current approach is adequate. It requires specialist knowledge of money laundering typologies specific to commercial property, practical experience assessing business risks, and proportionate application of enhanced due diligence when risk factors are present.
If your estate agency handles commercial property lettings, sales, or lease renewals, now is the time to review your AML procedures with specialist support.
Contact RACO Today
To discuss how RACO can support your commercial property agency’s AML compliance, please contact us:
Our compliance specialists provide practical, sector-specific guidance that enables commercial property agents to meet their obligations without hindering business operations. We work with agencies of all sizes, tailoring our approach to each business’s working methods and risk profile.
Talk to our Compliance experts
At Regulation & Compliance Office, we work with businesses to create the necessary documentation and have the processes in place to ensure the business and its staff are thoroughly protected.
To enquire about our services and how we can service your business, call us on 0203 985 8550 or email us at info@regulationandcomplianceoffice.co.uk
Read other related articles:
AML Registration Is Not Optional: What Recent HMRC Enforcement Means for Regulated Businesses
Client Due Diligence: Historic High-Risk Countries – What Regulated Businesses Need to Know
Estate Agents Under Fire: Over £2.9 Million in AML Fines and What It Means for Your Business
