At the beginning of the year, new measures were introduced for letting agents who manage properties which, individually, yield an income of 10,000 Euros per month or more, to prevent money laundering and comply with customer due diligence checks (CDD). These measures are found in the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (“the Regulations”).

All letting agents across the UK are now supervised by HMRC for anti-money laundering (AML) and counter-terrorist financing purposes if they meet this requirement, and must register with HMRC by 10 January 2021. Registration is due to open this month.

Estate agency business has been supervised by HMRC since 2017. Any letting agent that falls within the scope of the Regulations and also carries out sales will need to inform HMRC that they carry out lettings activity also.

In broad terms, the Regulations require :-

1. CDD checks - to be carried out against any new tenants and landlords on or from 10 January 2020. This applies to any tenancy being renewed after this date. This means identifying and verifying the parties, obtaining information on the nature of any business relationship and details of any beneficial owners.

2. AML measures - appropriate steps must be taken to identify and assess the risks of money laundering and terrorist financing. Letting agents must establish an up to date, written risk assessment and a written policy on how to manage the risk and must appoint a nominated officer – Money Laundering Reporting Officer (MLRO) – who will be responsible for the business complying with the Money Laundering Regulations.

If a business fails to comply with the Regulations, they may face civil penalties or criminal prosecution, including unlimited fines and / or a prison term of up to two years. HMRC is the supervising body and is due to release Guidance on the Regulations, which are expected to mirror the Guidance for estate agency money laundering supervision.

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