The 5th Directive will be transposed into UK law as The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 on the 10th January 2020 to combat the global issue of money laundering and terrorist financing.
Under this update, & for the first-time letting agents will be required to comply with anti-money laundering legislation.
What does this mean practically? It means you will be required to register with an AML supervisory board, conduct a risk assessment, appoint a MLRO, document your aml policies & procedures including your SAR internal processes & conduct staff training.
A good place to start in understanding your general AML obligations is Veriphy’s Pillars of AML Compliance Guide.
According to the new money laundering regulations, letting agents must carry out customer due diligence on prospective landlords & tenants when an agreement is concluded for the letting land;
Letting agents will have to register with HMRC for AML supervision. If you are a sales & letting agent, you should already be registered and will just need to update your existing documentation to include the fact you are involved in lettings.
Under AML regulations, you will be required to adopt a ‘risk-based’ approach to your due diligence. This means you must identify, assess and understand the risks to which your business is exposed and take appropriate AML measures to commensurate to those risks to mitigate them effectively.
Customer due diligence (CDD) is the process whereby you collect relevant & appropriate data surrounding your client/customer before engaging in a business relationship or high-value transaction. It is part & parcel of general AML procedures which include identity verification, address verification and a screen against the PEP & Sanctions lists.
In some circumstances where the risk is determined to be relatively high, enhanced due diligence (EDD) is required. This could include, but is not limited to;
In this instance, you will need to identify the director/significant person who owns more than 25% of the shares and carry out CDD on this individual.
“Letting agents must take reasonable measures to understand the ownership and control structure of; a legal person, trust, company, foundation or similar legal arrangement.”
Determine & document your organisation’s risk to ML/TF via these three key areas;
The Governments website has useful resources to help formulate your organisation’s ML/TF risk analysis.
An effective AML policy should cover your agency’s internal policies & procedures concerning your anti-money laundering efforts.
It must include:
AML training is imperative for any organisation deemed to be within the ‘regulated’ sector. It is recommended that all staff undergo annual anti-money laundering training and that the training is recorded for general up-keep & auditing purposes.
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