Money Laundering Regulations
Letting agents have been advised of new rules made to the governments money laundering regulations on January 10th, 2020. The new changes focus on updating the UK’s AML regime to incorporate international standards. These changes were set by the Financial Action Task Force (FATF) to transpose the EU’s 5th Money Laundering Directive. As a result, letting agents will be required to assess certain tenancy agreements. In particular, the concern is the potential for them to be used as a mechanism to clean up the proceeds of crime.
Agents handling higher value rentals
All tenancy agreements with a rent in excess of €10,000 per month will adhere the new money laundering regulations. This means that lettings agents will be required to carry out ‘know your customer’ checks on landlords and tenants. These checks will include ID checks and detailed verification that the tenancy is genuine. Consequently, tenancies that fall within these regulations will require on-going monitoring to check the money-laundering risks remain relevant. Therefore landlords and tenants who fall into this category of tenancy should prepare for more questions and administration.
Procedures for Letting Agents
It’s recommended that agencies identify risks of money laundering or terrorist financing activities and manage and reduce those risks. One of the suggested measures is to appoint a nominated person to manage the new money laundering regulations. Furthermore, this ensures Customer Due Diligence (CDD) checks are carried out on new tenants and landlords handling higher value rentals.
Agencies must take reasonable measures to:
- Understand the ownership and control structure
- Obtain information on the intended nature of the business relationship
- Identify the source of funding and wealth
- Carry out appropriate checks on both parties if an existing tenancy is renewed after January 10th, 2020
Tenant information
Tenants can ensure agents are operating to the highest industry standards by checking that they:
- Are a member of on the three self-regulatory industry bodies: ARLA Propertymark, UKALA & RICS
- Have Client Money Protection (CMP) in place
- Are registered for Anti-Money Laundering supervision with HM Revenue and Customs
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