From today, 10 January 2020, all letting agents who manage properties which, individually, yield an income of 10,000 Euros per month (or equivalent) or more, must now comply with regulations set out in in the Money Laundering and Terrorist Financing (Amendment) Regulations 2019.
All letting agents across the UK will have 12 months to register with HMRC if they meet the requirements. However, HMRC’s online registration system for letting agents won’t be operational until May 2020.
All letting agents in the regulated sector for AML will need to comply with the Regulations, despite not being able to register. Customer due diligence (CDD) checks will need to be carried out on any new tenants and landlords on or from 10 January 2020. Also, if an existing tenancy is renewed after this date, letting agents will need to carry out appropriate checks at that point on both parties.
Estate and letting business
Any letting agent who carries out sales and is already registered with HMRC for AML supervision and fall within the scope of the Regulations, they will need to inform HMRC that they carry out lettings activity. This can be done once the online applications process is up and running.
Customer Due Diligence (CDD)
CDD must be carried out on both the tenant and landlord for any tenancy agreement with a monthly rent of 10,000 Euros (or equivalent amount) or more before establishing a business relationship. This means identifying and verifying the customer, obtaining information on the nature of the business relationship and details of any beneficial owners.
Propertymark believes it is best practice for all letting agents, regardless of whether they fall under the definition of businesses with HMRC for AML supervision to carry out CDD on all their customers. This is because committing an offence under the Proceeds of Crime Act 2002 applies to everyone and criminalise any involvement in the proceeds of any crime if the person knows or suspects that the property is criminal property.
Information from David Cox at ARLA Propertymark