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Are you ready? New Anti Money Laundering rules go live TODAY!

Extra AML responsibilities for letting agencies become law today after being passed by Parliament just before Xmas.

Nigel Lewis


money laundering

When most of the property industry was escaping for the Christmas break, Parliament passed new legislation to bring the fifth European Money Laundering Directive into law.

This means that from this morning onwards, agents must comply with the upgraded Anti Money Laundering (AML) legislation, which was introduced by amending the Money Laundering Regulations 2017 and the Proceeds of Crime Act 2002.

These have changed AML in two key ways. Agents renting out residential or commercial properties for more than €10,000 or (currently) £8,500 a month are brought into its scope for the first time.

Letting agents will need to ensure that due diligence has been carried out on the landlord, tenant, guarantor or authorised occupier.

Also, agents must now confirm not only the identity of their client, ensuring they are not a politically exposed person, but also their client’s ownership of the property.

money launderingThe new AML laws also covers rental deposits which Jerry Walters (left), Managing Director of AML compliance consultancy Financial Crime Services says agents must use robust due diligence checks to “establish the authenticity of deposits, prior to accepting them”, he says.

“In addition, the new directive states that lettings agents must have comprehensive AML written policies and procedures in place, that they agree to undertake a firm-wide Risk Assessment and ensure that all staff have recognised AML training.”

David Cox, Chief Executive of ARLA Propertymark, says: “Despite the HMRC’s online register not being operational until May 2020, letting agents will need to comply with the regulations from 10th January 2020 and if they’re found to be non-compliant with the regulation’s agents may face civil penalties or criminal prosecution.

“However, irrespective of whether agents fall under the definition of regulated businesses with HMRC for AML supervision, Propertymark recommends it’s best practice for all letting agents to carry out Customer Due Diligence (CDD) on all their customers.”

Electronic verification Another change ushered in by the new AML regulations is that HMRC now officially sanctions estate agents using electronic identity verification methods in addition to traditional document eye-balling. “The Government – and the EU – are right to want to see more use of electronic verification. It’s been shown to be more reliable, quicker and more cost effective than manual checks,” says Martin Cheek, Managing Director of AML specialist SmartSearch.

Read more about AML.

January 10, 2020

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