The Treasury has published a UK Government Consultation Paper on the transposition of the EU 5th Money Laundering Directive into UK law by January 2020. The Directive brings Property Letting Agents in line with Estate Agents, who will from January 2020 have to register with and comply with HMRC Rules as the industry money laundering regulator. The regime will affect all lettings where the monthly rent equals to or exceeds €10,000 (about £8,600).
The Consultation raises some interesting questions:
• should “letting” for regulation purposes, include property management and rent collection businesses;
• on which persons should CDD should be carried out; landlords and tenants or landlords only, and at what point in the business relationship or transaction process the CDD should be carried out; and
• is the €10,000 threshold too high; should that be reduced further to cover a greater percentage of transactions.
From personal experience, I see a wide range of AML understanding and compliance across the Estate Agency sector; most of which doesn’t pass muster. The HMRC guidance and templates are woolly and unfocussed and the RICS templates included in the new Practice Statement are woefully simplistic and in the case of the reliance letter, plain wrong.
Until HMRC develops some proper standard templates to assist, what has hitherto been a relatively unsophisticated property letting industry, then compliance with the regulations in January 2020 seems like la la land!