The property sector has been under increasing regulatory scrutiny for some time. Ever since the 4th Money Laundering Directive (4 MLD) came into effect on 26th June 2017, estate agents are now expected to carry out money laundering checks on both buyers and sellers of properties.
The 4 MLD was passed by the European Parliament with the aim of stepping up the fight against money laundering and impeding terrorist financing.
The new legislation has come into force within the property sector due to increasing concerns that foreign criminals have been exploiting the London property market by laundering billions of pounds. Added to this, there has also been a growing rate of identity theft within the sector, particularly on mortgage and high-value property transactions.
Although the directive clearly states that only estate agents are required to comply with new AML legislation recently there has been a case in the news that has caused some confusion.
A letting agent was told by their bank that they required ‘Politically Exposed Persons’ checks to be performed on all letting clients – despite the directive [Source].
The bank in question was Handelsbanken, which confirmed that it does indeed require clients of letting agents who have client accounts with them to be screened for money laundering.
Many industry professionals believe the legislation should apply to both the sales and lettings side of the business [Source] as there is a real risk that money laundering activity could potentially move into the lettings sector, which remains unregulated.
Banks are becoming increasingly concerned about the risks surrounding client accounts and do not want to directly or indirectly allow a Politically Exposed Person to facilitate money laundering.
This case potentially has wide-ranging implications for the property sector.
So, due to the constantly changing regulation, what should you be doing now to ensure compliance and how can Contego help?
At Contego we advise whether you are an estate or letting agent, that you should be ready for increasing money laundering regulation. We recommend to our clients to go beyond the required regulatory checks and perform due diligence on tenants, landlords, buyers and sellers, so you know exactly who you are doing business with.
We work extensively with leading national estate and letting agents, performing both AML and Right to Rent checks as well as performing due diligence on companies and providing risk management solutions.
Watch the first video in Contego’s 4th MLD series <INSERT LINK>, as Head of Client Development, Richard Ingles, discusses the changes to regulation and how Contego can assist your property firm.
If you would like to learn more on how Contego’s RegTech solutions can automate due diligence checks, reduce compliance costs and keep the regulators at bay, then get in touch by calling +44 (0) 1235 375 000 or visit the Contego website to find out more and book an online demo.