Landlords with agents face due diligence checks

Propertymark is urging agents to familiarise themselves with updated guidance, so they don’t fall foul of anti-money laundering rules.

The move will see agents carrying out customer due diligence on their landlord clients – and tenants.

Following HM Treasury approval, the updated guidance will help property agents comply with the Money Laundering Regulations 2017 and covers:

• Customer due diligence
• Record keeping
• Reporting suspicious activity.

The guidance has been in effect since 10 January 2020 when the Fifth Money Laundering Directive came into force, extending the requirements to relevant letting agency businesses, but the document had not received HM Treasury approval.

Publishing a review of its Anti-Money Laundering regime

With the Government publishing a review of its Anti-Money Laundering (AML)/Countering the Finance of Terrorism (CFT) regime at the end of June, it also published two post-implementation reviews to fulfil its statutory obligations.

Now, taken together, the three documents make a thorough evaluation of the role of the regulations in the country’s anti-money laundering regime and set out the next steps to improve their effectiveness.

Due to the Proceeds of Crime Act, Propertymark believes it is best practice for all letting agents, regardless of whether they fall under the definition of regulated businesses with HMRC for AML supervision, to carry out Customer Due Diligence on all their customers such as:

• Landlord
• Tenant
• Guarantor
• Permitted occupier
• Any other relevant parties to the transaction.

Steps to identify and assess the risks of money laundering

Propertymark is encouraging agents to familiarise themselves with the guidance and take appropriate steps to identify and assess the risks of money laundering and terrorist financing that its business could face.

• Written Risk Assessment: Establish and maintain an up-to-date written risk assessment that is appropriate to the size of the agency
• Written policy on how to manage the risk: Property agents must establish, maintain and review written policies, controls and procedures to mitigate and manage effectively the risks of money laundering and terrorist financing identified in any risk assessment
• Internal controls: Appoint a senior manager as Nominated Officer/Money Laundering Reporting Officer (MLRO) responsible for the agency’s compliance with the rules.

‘Agents must continue to take appropriate measures to adequately mitigate risks’

Timothy Douglas, the head of policy and campaigns at Propertymark, said: “Property agents must continue to take appropriate measures to adequately mitigate the risks of money laundering to their businesses.

“Without action, the UK property market remains vulnerable to attack.

“Propertymark has a library of resources and training courses to help our members to do this.”

He added: “We know that additional legislative measures will be introduced as part of a second Economic Crime Bill later this year to safeguard and support the UK’s open economy.

“It’s clear from the review that the Government is proposing further work through a second Economic Crime Plan to improve the implementation of the regulatory framework.

“Alongside action from businesses, effective supervision is key, and we will continue to work with the Government to shape future reforms.”