Too early to tell if letting agents abide by anti-money laundering - report

A new report from the government says it’s too early to tell whether lettings agencies are abiding by new anti-money laundering regulations.

The report - a national risk assessment of money laundering and terrorist financing - condemns the poor performance of much of the residential property sale sector, alleging that around half of agencies selling homes at £5m or more are even registered with HMRC.

As of January this year relatively small number of lettings agencies were expected to register for AML with the Revenue. 

Only those who let land or property for a month or more, at a rent of €10,000 or above, were covered by the regulations because, as the report puts it, “rental land and properties above this threshold are considered attractive for laundering illicit funds due to their high value.”

The report also says: “All Letting Agency Businesses are required by law to perform right to rent checks on tenants, however customer due diligence is only required on the small number of tenancies over €10,000 per month. As a result, it is possible for there to be high levels of anonymity within the lettings sector, including the landlord, tenant and other interested parties and clients. 

“Landlords may have purchased the property with illicit funds, tenants may be paying rent with illicit funds (as a realisation of their proceeds), or the landlord and tenant may be part of the same criminal group, laundering their funds under the guise of rent payments. This anonymity is exacerbated by the potential exposure to high-risk jurisdictions when letting agents pay rent into offshore accounts without knowing the ultimate beneficial owner.”

However, given the fact these regulations have been in effect for less than a year, the report says it’s too early to tell on their effectiveness or whether agents are complying.

That’s not the case in the sales sector, where online and super-prime agencies are criticised by the report, as you can see in this Estate Agent Today story.