With the fifth Money Laundering Directive coming into force today, agents are reporting that they are being told that they must use electronic verification to make their checks.

Some agents are apparently being cold-called by suppliers and being told that it is no longer allowed to make AML checks by looking at documentation such as passports and driving licences.

Agents are also being told that unless they comply with the new AML regime as from today, they face immediate hefty fines and/or criminal prosecution.

Some firms are also being told that all letting agents fall under the new regime.

However, as EYE’s article yesterday by compliance expert David Beaumont said, electronic checking is an option but not a legal necessity.

Fines are some way off, as yesterday’s article also explained, because compliance is linked to new guidance that has not yet been published.

The new AML regime will catch some letting agents, but these are likely to be in a small minority because it will apply only to firms handling individual rentals with expensive monthly rents (10,000 euros, currently £8,484.41).

David Beaumont, who is the managing director of Compliance Matters and runs a free compliance helpline for EYE subscribers, said that after his article appeared yesterday on EYE, he received a number of calls for advice.

He said: “There is clearly some hard selling going on, as well as incorrect and misleading ‘guidance’ published.

“However, while agents should of course comply with the new regime, they can be assured that while the use of electronic ID verification has been growing, there is nothing that has been introduced in legislation or in HMRC guidance that states that agents must use an electronic service.

“Similarly, only a small percentage of letting agents – by no means all – will be caught by the new regime starting today.”

Meanwhile, NAEA and ARLA Propertymark chief executives Mark Hayward and David Cox are advising that any letting agents who are affected must register for AML supervision in order to be compliant.

They are going further, and recommending that all letting agents carry out due diligence on all customers.

In a joint statement they said: “The new Regulations create a level playing field in the sales and auctions market and we welcome this.

“The Regulations have also been expanded to include the letting agency sector for high value transactions with a monthly rent of 10,000 euros. Those letting agents who fall within the scope of regulated businesses and manage tenancies that meet the threshold will need to register for anti-money laundering (AML) supervision.

“Despite the HMRC’s online register not being operational until May this year, letting agents will need to comply with the Regulations from today.

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

Agents should be aware that the fees for AML supervision are changing. The premises registration fee has been raised from £130 to £300 – a large increase in percentage terms.

More details can be found here.

Yesterday’s EYE article will be updated as the new AML regime progresses, and new information released.

Tomorrow – and what will the new anti-money laundering regulations mean for agents?