The impact of the 4th Money Laundering Directive on the UK is wide reaching, not least in the property sector where we know of the significantly increased risk of money laundering given the high value nature of property transactions.
In a series of 3 blogs we look at the implications for Estate Agents, specifically in dealing with Politically Exposed Persons (PEPs), Beneficial Ownership, and the impact on lettings.
If you missed our first blog you can see it here:
PEPs and the 4th Money Laundering Directive
Under the 4th Money Laundering Directive, Lettings Agents will fall under the definition of obliged entity (previously Designated Persons); a wide reaching definition essentially including businesses who enter in to business relationships where cash transactions are above €10,000 e.g. financial institutions, tax advisors, lawyers and estate/lettings agents etc.
The likely result of which is to bring into the scope of your money laundering checks all your landlords. They then become subject to the same level of due diligence your sellers do and you undertake your risk-based approach as you would do normally; deciding whether Customer Due Diligence will suffice, or enhanced CDD is required.
While not confirmed, the anticipated introduction of CDD on landlords falls in line with efforts to more tightly regulate the lettings sector with the recent introduction of Right to Rent. There are also whispers that agents could also be required to undertake CDD on buyers… this remains to be seen but given the direction the regulation is going, we might suggest it would not be too much of a surprise if that did happen.
See our guide to Right to Rent here
Compliance in a Box provides a very simple solution to enable you to undertake Customer Due Diligence (CDD) and enhanced CDD, fully compliant with HMRC and the Money Laundering Regulations 2007, including the 4th Money Laundering Directive. To try Compliance in a Box FREE for your first 3 properties contact me today.
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