The Money Laundering and Terrorist Financing (Amendment) Regulations 2019

The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (‘the 2019 Regulations’) implement the European Union Fifth Money Laundering Directive and they come into force on the 10 January 2020.

As a letting agent in England and Wales, if you fall within the following definition, you will need to register with HM Revenue and Customs and comply with existing money laundering regulations which require you to put in place a number of policies, controls and procedures to anticipate and prevent your business being used by criminals to launder money and fund terrorism from 10 January 2020.

“Letting agent” means a firm or sole practitioner who, or whose employees, carry out letting agency work, when carrying out such work.

“letting agency work” means work:

(a) consisting of things done in response to instructions received from:

(i) a person (a “prospective landlord”) seeking to find another person to whom to let land, or

(ii) a person (a “prospective tenant”) seeking to find land to rent, and

(b) done in a case where an agreement is concluded for the letting of land:

(i) for a term of a month or more, and

(ii) at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 euros or more.

As well as bringing certain high value lettings into the scope of the money laundering regulations, the 2019 Regulations amend The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘the 2017 Regulations’) to ensure that ‘relevant persons’ as defined by the 2017 Regulations understand the ownership and control of any company, legal arrangement or trust structure of the customer. The 2019 Regulations also prescribe mandatory enhanced due diligence measures when a transaction appears to be ‘high-risk’.

There have been updates to the existing Anti-Money Laundering Documents for Estate Agents (both residential and commercial property) to assist agents in complying with the 2019 Regulations.

Two new subfolders have been created for high value lettings (one for residential property and the other for commercial property). These new subfolders contain new templates to assist letting agents caught by the 2019 Regulations in complying with their money laundering obligations.

Failure to comply with the 2017 Regulations and the 2019 Regulations can result in civil penalties or criminal prosecution. Senior managers and nominated officers can also be found personally liable for a breach of these regulations.