Letting agents could be regulated by membership body for AML

The Government has dropped a big hint that supervision of letting agents for anti-money laundering purposes will be by a membership organisation rather than HMRC

It has stopped short of naming, for example, ARLA, NALS or RICS, but does say that professional bodies can apply to become supervisors.

It is also possible to infer that an estate agency membership organisation might in future regulate its sales agents members.

The suggestion comes in a new consultation on extending anti-money laundering rules to letting agents when the Fifth Money Laundering Directive takes effect.

Currently, this would be by January 10, 2020.

Estate agents are already in the scope of anti-money laundering rules, but letting agency activity is not covered.

The Government is proposing that the fifth directive should apply to high value letting transactions, with a monthly rent of EUR 10,000 (about £8,600) or more, although it does query whether this is the right ceiling.

One of the other questions in the consultation is whether the requirement for customer due diligence should be carried out on both landlord and tenant.

HMRC currently supervises estate agents, and the consultation says: “The Treasury considers HMRC as a supervisor suited to the role of regulating letting agents, given HMRC is the primary advisory for this sector”.

It goes on: “The Treasury will however consider appointing self-regulatory body supervisors of letting agents, similar to estate agents.

“Professional bodies can apply to the Office for Professional Body Anti-Money Laundering Supervision to become supervisors.

“If implemented in practice this would mean that those businesses that were members of eligible estate agency or letting agency professional bodies could be supervised by those bodies [for anti-money laundering purposes] rather than by HMRC.

“HMRC would remain the supervisor of letting agents of relevant agency businesses that were not members of these bodies.”

The consultation canvasses the opinions of both the professional bodies and of agents, asking: “Are you a member of a professional body and would this body be an appropriate supervisor? If this body would be an appropriate supervisor, please state which professional body you are referring to.”

It has been an open secret for some time that Propertymark has ambitions to become an industry regulator, with proposed licensing, compulsory qualifications and minimum standards of entry of both sales and lettings agents on the horizon.

The closing date for responses to the latest consultation is June 10.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/795670/20190415_Consultation_on_the_Transposition_of_5MLD__web.pdf

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7 Comments

  1. Property Poke In The Eye

    This Anti Money Laindering is an absolute joke.  Real criminals know how to play the game.  They wont be coming to letting agents to launder or layer money.

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  2. DASH94

    I can’t see how you’d launder money via lettings – there’s no way of getting clean cash out of the transaction.   They might catch a few cash-in-hand workers who pay their rent in cash – and clobber them whilst the really big offenders continue to get away with it.

    That way they’ll  be able to say ‘there have been x number of prosecutions’ as a result of the new measures.

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    1. MichaelDay

      Here’s two ways in which monies could be, and is, laundered via Lettings.

      Tenant pays a year in advance plus deposit a few days ahead of signing and check in. Then says they have changed mind and gets money back.

      Tenant is “cohort” of landlord and pays rent with “dirty money” to agent who then sends “clean money” to landlord.

      Transactions of 15000 euros or more are already covered under AML regulation as “occasional transactions”

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      1. DASH94

        Of  course – that makes sense.   Those wouldn’t have occurred to me – we don’t take more than a month’s rent in cash at a time.  

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      2. Mark Walker 2

        I know of a Commercial agent where this actually happened with a foreign entity.

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  3. seenitall

    We don’t take any cash at all.   So its all from UK bank accounts to us even rent in advance. If it dodgy money then Its already been laundered before reaching us.    Just more red tape and cost.  

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  4. Matthew Beaumont

    If there was no speed restrictions on roads we would all drive at what ever speed we liked and probably cause a substantial amount of accidents in the process.

    Speed restrictions might not be liked but it deters the average person from speeding a lot of the time.

    If there was no regulation at all in the sector then it would be rife and no one would care, but the regulations deter money launders from using you to achieve their goal.  You may never see money laundering within your business but isn’t that a good thing.

    Yes no one likes to have to drive at 70mph on a motorway but we do it to avoid punishment.

    I know over regulation in this sector is killing it but no regulation at all is just silly.

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