Letting agents with monthly rents of €10,000 or more are required to register with HMRC for AML supervision. They also need to conduct risk assessments and review policies on how they would deal with money laundering and terrorist financing.
As part of the AML rules, letting agents must complete ‘Know your customer’ (KYC) checks.
A new Economic Crime levy:
A new levy ‘Economic Crime (Anti-Monet Laundering) Levy’ has been introduced with the aim of funding anti-money laundering and economic crime reforms.
For the period between 1 April 2022 – 31 March 2023, payments were due on 1 April 2023 for estate and letting agents that are AML regulated. If larger businesses fail to pay on time, agents may have to pay a £250 admin fee. However, this does not apply to smaller business with revenue below £10.2 million.
Banks and Customer Due Diligence rules:
Banks have been misinterpreting AML rules for undesignated client accounts. Letting agents utilise this type of account to keep the property owner’s money secure.
Customer Due Diligence is a requirement for letting agents that meet the €10,000 AML threshold. However, since banks have been misinterpreting the AML rules, some banks have been closed or restricted.
Banks must be aware that it is a legal requirement for letting agents to follow Client Money Protection (CMP) rules to minimise any risk.
Propertymark has recommended that the government considers reducing the €10,000 threshold to zero which will automatically encompass all lettings activity and all tenancies in the PRS and will make it easier for agents to work with banks.
The information in this post is valid to the best of our knowledge on the date of posting. It is advised that you seek independent advice based on your individual circumstances.
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