Will the New Money laundering Regulations Affect You?

What you need to know – A quick overview for letting agents.

New Money Laundering Requirements for Letting Agents

• What is the threshold where due diligence will be required?

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;

• For a month or more, and
• at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 euros or more.

• Who is the AML supervisory body for the Property Sector?

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.

Due Diligence

• What’s the difference between CDD and Enhanced CDD? When should you use each type of checking?

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;

1. Obtaining additional information on the client,
2. Obtaining additional info on the intended business relationship,
3. Identifying the clients/customers source of funds

• What if you’re dealing with a company rather than an individual?

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.”

AML Policies & Procedures

• What should my risk assessment include?

Determine & document your organisation’s risk to ML/TF via these three key areas;

1. Products & Services
2. Customers & Entities
3. Location

The Governments website has useful resources to help formulate your organisation’s ML/TF risk analysis.

• What should my AML Policy cover?

An effective AML policy should cover your agency’s internal policies & procedures concerning your anti-money laundering efforts.

It must include:

1. Your Customer due diligence approach
2. Your monitoring & controls
3. Your disclosure of suspicious activity internal form & procedure
4. Your nominated MLRO
5. Your record-keeping procedure
6. Your training procedure

• What training is required? How often?

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.