Letting agents facing compliance changes
As the government works to tighten anti-money laundering (AML) regulations, letting agents in the UK will face some compliance changes. The regulations, which come into effect on 14th May, will require letting agents to verify the identity of tenants and landlords, check that they are not on the financial sanctions list, and monitor and report all tenancy agreements, regardless of the rental value.
That last one is expected to be the most significant change. Reports are currently only required if the monthly rent is more than £8,300 per month.
The latest figures from the government show that estate and letting agency businesses were fined £3 million in a single year from 468 AML breaches. The median fine was just over £4,000.
“These new anti-money laundering rules represent an important shift in protecting landlords and the wider rental market,” Christopher Hutchings, Head of Risk & Compliance at Creditsafe said. “Until now, only the most expensive tenancies were under scrutiny, but criminal activity can occur at every price point, so broadening these checks is a smart and necessary move.
Changes to vet all rental agreements should provide more protection across the board. But the increase in resources to maintain AML compliance could see letting agents struggle. This may result in an increase in fines.
“It’s important to recognise that many letting agents will face real challenges as they adjust,” Christopher Hutchins added. “The scale of the change means compliance can no longer be an afterthought, it has to be embedded into everyday operations.
“To navigate this transition smoothly and avoid steep fines, agents should review their current processes and introduce robust systems for identity verification and reporting. Investing in modern technology and specialist compliance support isn’t just a box-ticking exercise; it’s the best way to ensure they meet the new obligations and protect their businesses in the long term.”
Creditsafe has put together a guide outlining the changes and offers tips to help letting agents avoid penalties.
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