The Treasury confirms letting agents will not be regulated under anti-money laundering law

Anti money laundering laws to tighten for sales agents and no longer apply to letting agents
Treasury announce letting agents won't have to obey money laundering regulations

In response to the EU’s 4th Money Laundering Directive, HM Treasury have announced that letting agents won’t be regulated under anti-money laundering laws despite receiving considerable support from within the industry itself.

Letting agents who handle money, unlike estate agents, are to be ‘let off’ the responsibility of checking the source of client funds.  Regulations for estate agents however are due to tighten.

The Treasury’s response states: “While it should be noted that the majority of respondents to the consultation supported the inclusion of letting agents within the regime, intelligence and evidence was not provided to justify the inclusion of lettings activity and the attendant costs of this proposal for those affected.

In line with the directive, lettings agents will continue to be within the scope of the regulations where they carry out estate agency work in accordance with section one of the Estate Agents Act 1979 (as amended). However, the application of the Money Laundering Regulations will not be extended to include lettings activity.”

David Cox, managing director at ARLA Propertymark, commented: “We are disappointed the Government has chosen not to include lettings activity within the Money Laundering Regulations 2017. The risk is that money laundering activity will transfer from the sales sector, due to the increased powers within the new regulation, into the lettings sector which remains unregulated.

However, within the context of the recently increased legislative burden on letting agents, coupled with the shock announcement to ban letting agent fees in the Autumn Statement, we understand why the Government has chosen not to impose these requirements at this critical juncture.”

The new regime will require all sales agents to ensure they include purchasers in their due diligence.

Mark Hayward, NAEA Propertymark chief executive said:“The Government has announced that purchasers are now included in the application of customer due diligence, so additional checks will need to be made by sales agents and auctioneers, which will be complicated by the fact that buyers are sometimes at arm’s length and there’s not necessarily a face to face relationship.

Hayward added: “further clarity will be required as to at what point the purchaser becomes a purchaser, and this is an issue we will be seeking guidance on.”

Full article available on Property Industry EYE: http://www.propertyindustryeye.com/surprise-as-treasury-announces-letting-agents-will-not-have-to-obey-money-laundering-laws-after-all/

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