Money Laundering

The record fine of 17m on Entain, the company that owns Ladbrokes, Coral, and Foxy Bingo, has brought the AML regulations of the UK into center stage. It also sounds alarm bells for estate agents. Estate agents in the UK are already required by law to demonstrate that they know their customers. They must also apply Anti-Money Laundering (AML) procedures and carry out due diligence with all existing and ongoing customers. A draft EU Bill says that letting agents and landlords must also carry out identity checks if they rent out directly.

What is Money Laundering?

Money Laundering is a strategy criminals used to conceal the origin and ownership of the proceeds of criminal acts. The aim is to make money earned through nefarious methods lose its criminal identity and seem legitimate. The UK property market is an area of deep concern for the government in connection with money laundering. The Money Laundering, Terrorist Financing, and Transfer of Funds Regulations 2017 were introduced and came into force on 26th June 2017. The regulations will help detect, deter and disrupt efforts at money laundering in the property market.

What are the Responsibilities Related to AML?

Agents in the UK real estate market must ensure that they know their customers. They must be able to satisfactorily demonstrate CDD or Customer Due Diligence for every Purchaser and Vendor. Money laundering checks are not new to the property market in the UK. They have been around for many years now. However, these new regulations push for diligent enforcement. Home renters in the UK will find their agents and landlords asking for information that they have already provided in the past.

For UK Estate Agents, in particular, the regulations are not only about just checking the credentials of the renters meticulously but also proving they have done so.

CDD is applied to rental deals on a risk-sensitive basis. It takes into account the type of customer, their business connections, and the nature of the transaction. Landlords and agents must also ensure that they have established the identity of the person they are doing business with. This must be done before they enter into a business relationship or any monetary transaction takes place.

Checks Expected From Landlords

From the time the landlord allows the letting agent to rent their property and before marketing the property, the agent must take steps to verify the name, date of birth, and contact details of the client. This verification must be done using documents issued by the government, such as a driving license or a passport. If landlords live in a completely different part of the country or another country, such verification processes can prove to be challenging. However, the problem can be solved by providing good quality copies of the documents duly certified by the appropriate authority. The Agent must also analyze if anyone else benefits from the business relationship. If they believe such an arrangement exists, they can ask for information from these parties also, even if they are not named on the lease papers officially.

Enhanced Checks

The UK government expects landlords and agents to conduct detailed and stringent checks to ensure they are not exposed to AML risks. The checks will be customized based on every agency policy and the circumstances of the business. Its the duty of the landlords and the agency to assess the risk before their clients enter into a business relationship. It is apparent from past and recent developments that these AML rules have been successful in checking organized crime.