The 5th Directive - Anti-Money Laundering

As from the 10th January 2020, all letting agents who manage properties which, INDIVIDUALLY, have an income of 10,000 Euros or more per month, must now comply with regulations set out in the 5th Money Laundering Directive.

The 5th Directive has been extended to cover all forms of tax advisory service, lettings agents and art dealers. Access will also be available to members of the public to request information on the real owners of firms operating in the EU. Whistleblowers who report money laundering will have also have increased protection and the right to anonymity.

From May 2020, all letting agents across the UK have 12 months to register with HMRC if they sit within the requirements set out above. Even though the registration portal is not yet available, Customer due diligence (CDD) checks must be carried out new tenants and landlords on or from 10th January 2020. This process will also apply any existing tenancy is renewed after this date, meaning that letting agents will need to carry out  CDD checks at that point .

Estate Agents may have already captured EDD requirements under their anti-money laundering regulation however,they should also ensure that their policies, procedures and processes are updated to ensure they adhere to requirements outlined in the new Directive. Letting agents must take steps to identify and assess the risks related to money laundering and terrorist financing. This can be done by implementing a written risk assessment and a written policy on how to manage risk.

A Money Laundering Reporting Officer (MLRO) must be appointed. This individual will be responsible for ensuring the letting agency complies with the Money Laundering Regulations.

Letting agencies must provide regular training on how to recognise and deal with transactions that may be related to money laundering.

The CDD Checks

CDD checks must be carried out on both the tenant and landlord for individual lets where the monthly rent equates to 10,000 Euros (or equivalent amount) or more. This involves identifying and verifying the customer, obtaining information on the nature of the business relationship and details of any beneficial owners.