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Posted on March 16th 2017 by admin-movingin

Surprise as Treasury announces letting agents will NOT have to obey money laundering laws after all

Original Author: Rosalind Renshaw

Letting agents will not be regulated under anti-money laundering law – despite overwhelming support, including from within the industry, that they should be.

However, the screws tighten on sales agents.

The unexpected move on letting agents was announced by HM Treasury in its response to the EU’s 4th Money Laundering Directive.

Barring a U-turn, letting agents – who, unlike estate agents, handle money – will be let off obligations to check out clients and the sources of their funds.

The Treasury’s consultation response states: “While it should be noted that the majority of respondents to the consultation supported the inclusion of letting agents within the regime, intelligence and evidence was not provided to justify the inclusion of lettings activity and the attendant costs of this proposal for those affected.

“The Government will only ‘gold plate’ where there is good evidence that a material ML/TF risk exists.

“In line with the directive, lettings agents will continue to be within the scope of the regulations where they carry out estate agency work in accordance with section one of the Estate Agents Act 1979 (as amended). However, the application of the Money Laundering Regulations will not be extended to include lettings activity.”

Yesterday evening, ARLA Propertymark managing director David Cox said: “We are disappointed the Government has chosen not to include lettings activity within the Money Laundering Regulations 2017. The risk is that money laundering activity will transfer from the sales sector, due to the increased powers within the new regulation, into the lettings sector which remains unregulated.

“However, within the context of the recently increased legislative burden on letting agents, coupled with the shock announcement to ban letting agent fees in the Autumn Statement, we understand why the Government has chosen not to impose these requirements at this critical juncture.”

However, the new anti-money laundering regime will step up a gear for sales agents, who will now have to specifically ensure that purchasers are now included in their due diligence.

NAEA Propertymark chief executive Mark Hayward said: “The Government has announced that purchasers are now included in the application of customer due diligence, so additional checks will need to be made by sales agents and auctioneers, which will be complicated by the fact that buyers are sometimes at arm’s length and there’s not necessarily a face to face relationship.

“However, further clarity will be required as to at what point the purchaser becomes a purchaser, and this is an issue we will be seeking guidance on.”