BROKERAGE
The UK takes a tough stance against those who breach the AML regulations and the responsibility for enforcing the regulations is delegated to various regulatory authorities depending on the type of company, for lawyers this is the Solicitors Regulatory Authority, for financial institutions this is the Financial Conduct Authority and for other businesses such as high value dealers this is HM Revenue & Customs (HMRC). There are numerous examples of companies being fined for breaking the rules, with the largest fine issued by HMRC being GBP 23.8 million, which was handed out in January 2021. The regulatory bodies also have the power to publicly name and shame the rule breakers. [1] The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (legislation.gov.uk)
Knowing where the money comes from is hugely important. If you are a broker or superyacht builder and you do not receive money from the corporate vehicle or person whose name is on the contract, that is a red flag event which you absolutely must check. It’s not enough to match the monies expected with the monies received from an account the client says “It’s one of my companies”. To do that puts you at risk. In those circumstances you need to talk to your compliance people on what to do next.
A good broker is your best asset. A poor broker waits for their commission to come in. Whether the aim is to build, sell or buy a yacht, or to secure charters, it is customary (but not necessary) in the industry for parties to be introduced by a broker.
Who pays the broker?
be entitled to a commission if they are the effective cause of the sale.
• The seller in sale and purchase, the builder in new constructions, and the owner in charter agreements.
• There is recent case law involving commission payments, either wrongly claimed or wrongly avoided. For example, in one recent case, the broker was denied commission as his involvement was too peripheral to be deemed an effective cause of the eventual sale. Transparency is a must. Watch out not only for the UK Bribery Act, but also bribery and corruption legislation across many countries.
Can the broker negotiate the contract?
• Yes, if acting as an agent and English law applies. The principal would be bound by the terms agreed. If the applicable law is not clear, the rules regarding agency may become a complicated matter. Check the implications with a local lawyer and get the terms of the agreement in writing.
Do I need to pay commission?
• The role and the entitlement of brokers is clear when MYBA forms are used. If these are not used, address the issue and put it in writing otherwise you will be at the mercy of the law applicable to where the relationship was formed. Under English law, a broker will
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