Agency trade body Propertymark has called for more practical anti-money laundering (AML) guidance for agents in its response to the government consultation on the effectiveness of the Money Laundering Regulations (MLRs).
In its response to the consultation published at the end of July, Propertymark found that although most property agents carry out AML checks, confusion remains about how to carry out customer due diligence (CDD).
“Much of the guidance provided by HMRC focuses on when to carry out checks and not how they can be completed effectively,” said Propertymark.
Since 2017, estate agents have been supervised by HMRC to prevent money laundering and terrorist financing under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
In 2020, this requirement was extended to letting agents with at least one rented property with monthly rents of 10,000 euros or more. A 2022 review of the UK’s anti-money laundering and counter-terrorist financing regulatory and supervisory regime, along with the Economic Crime Plan 2023/26, highlighted key areas where the existing regime could be improved.
The latest government consultation seeks to understand exactly how the existing MLRs could be improved to increase compliance and improve effectiveness.
The UK professional body of property agents drew on member survey data to illustrate the current challenges for agents and assess how targeted improvements could enhance the system.
Responses to its survey found four key methods that HM Treasury should consider that would improve the existing MLRs:
- Agents require more prescriptive guidance with practical examples, so they better understand their responsibilities. Agents understand that they have AML duties, but 96% of survey respondents said they would welcome more prescriptive guidance on how to meet their obligations, especially for more complex situations like identifying beneficial owners and sources of funds.
- Remove the 10,000 euro threshold for letting agents. Removing the threshold will ensure that all letting agents have to carry out CDD, says Propertymark. This removes potential opportunities for criminals to launder money through agents and helps reassure financial institutions who believe that letting agents pose a money-laundering risk, leading to fewer pooled client account closures.
- The closure of pooled client accounts requires more than new guidance for financial firms. Propertymark’s survey found that 96% of responses from members who had their pooled client account closedstated the bank either provided no reason or that they were closing all pooled client accounts held by letting agents. This suggests that banks are not closing accounts due to any perceived risk and are actively ignoring existing guidance. Therefore, any new guidance will have little effect unless the threshold is removed and all letting agents are supervised for anti-money laundering.
- Establish mechanisms to enable firms to carry out more simplified due diligence where very few risks are apparent. This will enable more property agents to focus their time on clients, landlords and tenants who present a higher risk, reducing the administrative burden for property agents and helping agents to identify more potential cases of economic crime.
Propertymark is the UK’s leading professional body of property agents, with over 18,000 members representing over 12,800 branches.
The organisation’s feedback is based on the results of a member survey which received over 150 responses.
Read the full response to the consultation here.
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