Implementation of the Fifth Money Laundering Directive
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23 December 2019
On Friday 20th December a statutory instrument, the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 No. 1511 , was laid in Parliament. The legislation implements the 5th Money Laundering Directive and will come into force on the 10 January 2020.
Although sales agents will be well aware of the current requirements, the new legislation brings a new requirement for residential and commercial lettings agents to carry out customer due diligence (CDD) checks when they let a property, for a term of a month or more, and at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 euros or more.
The regulations can be seen at http://www.legislation.gov.uk/id/uksi/2019/1511
If you are involved in rentals at or above 10,000 euros a month, we would particularly draw your attending to Part 3 of the regulations .
“(7A) A letting agent must also apply customer due diligence measures in relation to any transaction which consists of the conclusion of an agreement for the letting of land (within the meaning given in regulation 13(7))—
(i) for a term of a month or more, and
(ii) at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 euros or more.
(7B) The letting agent must apply customer due diligence measures under paragraph (7A) in relation to both the person by whom the land is being let, and the person who is renting the land.
Most firms will already have CDD procedures in place but, if required under the new regulations, these should now be amended to include lettings. For those who have not previously had to carry out checks, you will need to ensure that you meet the requirements of the AML regulations.
RICS have been working with HMRC on their updated guidance but to date this has not been published. As soon as the guidance becomes available, we will circulate a link. In the meantime, if a firm has not previously had to carry out customer due diligence checks, we would suggest that you read the RICS note on the previous guidance for sales agents.
