Tackling money laundering in the letting industry

Tackling money laundering is high on the Government’s agenda and the Economic Crime Act 2022 came into force quickly earlier this year following the invasion of Ukraine and concerns about property owned by Russian oligarchs.

In July updates were made to the guidance for those in the letting business and these were designed to help landlords and agents comply with the Money Laundering Regulations 2017, covering due diligence, record keeping and reporting suspicious activity.

Like other regulations in the private rented sector, the penalties for getting this wrong are significant and offences under money laundering regulations are punishable by up to two years’ imprisonment and/or an unlimited fine.

Landlords and agents both need to be aware of what this means in practice and the industry body, Propertymark has been very involved in working with Government on these regulations and earlier this month, representatives met with the All-Party Parliamentary Group on Anti-Corruption and Responsible Tax (APPG). Timothy Douglas, Head of Policy & Campaigns for Propertymark, met Rt Hon Dame Margaret Hodge MP, Chair of the APPG and was able to set out the case for regulation of the broader sector against the backdrop of issues with economic crime and piecemeal legislation, along with recent developments such as the introduction of mandatory Client Money Protection.

Propertymark has a clear timeline of campaign activity in this area and has long argued for a practical approach to anti-money laundering measures for the sector and attends meetings with the Home Office’s Economic Crime Legislation Private Sector Working Group, to keep this front and centre. A second Economic Crime Bill from the UK Government is due to come into force in this parliamentary session alongside an Economic Crime Plan. Dame Margaret Hodge, who has a formidable reputation for action and a comprehensive grasp of the Economic Crime brief, sought information about issues for agents and their clients with HMRC activity, and the effectiveness of HMRC as a supervisor given the lack of specialist knowledge of the sector.

The APPG’s recommendations have some similarity with Propertymark’s stated objectives which focus on comprehensive due diligence on all parties to a transaction and a public register of beneficial owners with the requirement for annual updates. This includes that the existing UK trust register housed in HMRC should be made more transparent. A more accessible register will enhance the ability to fight corruption, money laundering and illicit financial flows through better access to information by investigators, the press and civil society.

Agents and specifically estate agency businesses should be required to declare any property transactions with politically exposed persons to the National Crime Agency to target the use of the UK property market to launder funds. Propertymark called for an easily accessible politically exposed person list to help property agents comply with due diligence requirements.

If you need any advice on this or would like to discuss any other matters on the local property market, please do not hesitate to contact me.

Robert Ulph
Managing Director / ARLA Propertymark Advisory Board


Tel: 01394 337590  

Email: robert@pennington-online.co.uk