Estate and letting agents are preparing for tougher compliance checks as the government steps up anti-money laundering efforts.
Industry suppliers warn that the government is increasingly concerned with financial crime in the UK property market, and that agents should check that they are following all the right processes.
The announcement follows the news from earlier this year that HMRC inspectors are carrying out short-notice checks on agencies. More recently, sector suppliers have warned that HMRC is stepping up investigations to prevent sanctioned Russian oligarchs from laundering money through the UK property market.
Currently, all estate agent businesses must register with HMRC under money laundering regulations. Lettings-only agencies also have to register if they let out any residential or commercial property for a term of a month or more at a rent of at least €10,000 (currently around £8,400) per month. The government has put together a guide to AML procedures for estate agents to help with compliance in more detail.
Many estate and letting agencies have fallen foul of the rules since they came into force in 2017. Analysts have found that this cohort has received 21% of all AML compliance-related fines issued, the second highest proportion of any industry.
But the law-abiding majority could be hit too. Agents have reported that banks are closing the client accounts that they rely on for holding landlord funds. Crackdowns on undesignated client accounts by banks caused huge disruption in the lettings industry in previous years, and a repeat of that could leave thousands of property businesses having to make alternative banking arrangements.
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