Letting agents’ client accounts ‘being targeted by banks’ worried about AML risks

Nigel Farage isn’t alone in falling victim to banks who close down accounts, with many letting agents suffering the same fate, according to new research.

And anti-money laundering regulations are being blamed for the trend with banks worried that agents’ pooled client accounts are not ‘safe and secure’.

Innocent customers

Bank employees can lose their jobs and their employer face very heavy fines if money laundering occurs on their watch.

Now, right-wing think tank the Institute of Economic Affairs (IEA) says the AML rules are forcing banks “to close accounts of innocent customers en masse”.

Dr Jamie Whyte, Senior Research Fellow at the IEA, says: “The UK’s overly stringent anti-money laundering regime, which threatens banks with massive fines, is forcing them to close the accounts of tens of thousands of innocent customers.”

Many are finding it near impossible to open a client account.”

And the Tenancy Deposit Scheme has issued its own warning saying that a growing number of estate agents are taking the business decision to expand into lettings.

“However, many are finding it near impossible to open a client account.

“Furthermore, banks continue to close the existing pooled client accounts of established letting agents, some of whom have been trading for decades.” it warns.

Daily calls

The TDS says it is receiving calls on a daily basis from agents who are working hard to be compliant, but “are hitting a brick wall”.

“Looking at the issue from the banks’ perspective; estate and letting agencies are not regulated by the Financial Conduct Authority (FCA), which makes our industry less appealing to banks,” it says.

Tempting

Some banks will open business accounts for letting agents, but not client accounts, it adds.

“This is worrying because it could be tempting for agents to use a business account as a client account which would put them in breach of CMP (Client Money Protection) rules.”