The Fourth Anti-Money Laundering Directive (4MLD) came into effect in the UK on 26th June 2017. UK estate agents are now required to carry out comprehensive money laundering checks on both buyers and sellers of properties. The aim is to prevent criminals using the UK’s property market to launder vast sums of money, evade tax, or finance terrorism.
Although a last-minute reprieve made lettings agents exempt from the regulations, many have put stricter procedures in place anyway, believing that their immunity will be short lived. Corporate tenants, particularly in London, have been caught up in these changes over the summer, as additional paperwork has sometimes caused delays to move dates.
Despite their exemption, lettings agents do occasionally fall within the scope of the new regulations if they carry out estate agency activity (such as the transfer of a longer lease which has a capital value). Lettings agents may also come within the scope of 4MLD if they charge a % fee when a tenant purchases their rental property. They also need to be careful when accepting large sums of rental payment money up front.
Tenants are already subject to the right to rent checks, but many lettings agents have taken the decision to go beyond the required checks and perform extensive due diligence on tenants and landlords. Professional lettings agents constantly monitor new and emerging threats. With property fraud on the rise, confirming the source of funds used for payment is set to become even more common in London.
Corporate tenants relocating to the UK may find that the admin process takes a little longer and additional information may be requested, particularly if they offer to pay six months’ or a year’s rent in advance. Presenting themselves as a ‘risk free’ prospect to landlords may adversely position them as a risk for the letting agent!
While delays can be distressing, lettings agents who have strict compliance procedures in place are precisely the agents that Dwellworks wants to be working with. We will, however, do everything in our power to mitigate potential delays and communicate timelines as clearly as possible.