Anti-money laundering (AML) platform FCC Paragon has highlighted that changes in regulations for letting agents might lead to more breaches.
From 14th May, agents will need to conduct stricter checks, including verifying tenant and landlord identities, checking for names on the UK’s financial sanctions list, and monitoring all tenancy agreements, regardless of rent value.
Research by FCC Paragon found that only 2.5% of rental listings in the UK have monthly rents above £8,300.
This indicates a vast increase in paperwork due to the new rules.
Recent Government figures showed estate and letting agencies were fined £3m in one year for 468 AML breaches, with a median fine of just over £4,000.
These changes could lead to more fines as agents might struggle with the increased compliance workload.
Bekki Leaves, managing director of FCC Paragon, said: “The changes to anti-money laundering protocols are, for the large part, a positive that should provide a far greater degree of protection to landlords at all levels of the market.
“There’s no doubt that illegal practices aren’t refined to properties with asking rents of 10,000 EUR or more and so greater protections at all levels of the market should help to crack down on criminal activity.
“However, there’s a good chance that AML fines could climb, at least initially, as letting agents struggle to get to grips with the huge increase in the resources required to stay AML compliant.”
Leaves added: “It’s vital that they take a proactive approach if they want to avoid what can be hefty fines and the best place to start is to assess their onboarding and monitoring processes, whilst establishing clear reporting channels.
“Investing in third party help is likely to be paramount as they will no longer be able to process the paperwork required by utilising outdated methods such as manual checks.
“ID verification software and AML compliance platforms are well worth the investment if it means staying AML compliant and avoiding the wrath of the FCA.”
