Letting agents currently only have to do AML checks on deals for properties whose monthly rents are above £8,300 which equates to just 2.5% of the market but after 14th May, they will have to do checks on every single deal.

And those checks, says FCC Paragon’s MD Bekki Leaves (pictured), will be stricter and will include having to verify landlords’ and tenants’ identities and ensuring tenants aren’t on the UK’s financial sanctions list.

Massive increase

She fears that the massive increase in agents’ workload and its increasing complexity will lead to a lot more fines.

The latest Government figures show that, even before the changes, agents were fined £3m in just 12 months for a total of 468 AML breaches, with the average fine just over £4,000.

Fines could climb, at least initially, as letting agents struggle to get to grips with the huge increase in the resources required.”

Leaves says: “There’s no doubt that illegal practices aren’t refined to properties with asking rents of 10,000 EUR or more and so greater protections at all levels of the market should help to crack down on criminal activity.

“However, there’s a good chance that AML fines could climb, at least initially, as letting agents struggle to get to grips with the huge increase in the resources required to stay AML compliant.”

She advises: “It’s vital that they take a proactive approach if they want to avoid what can be hefty fines and the best place to start is to assess their onboarding and monitoring processes, whilst establishing clear reporting channels.”