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NAEA comments on client verification of buyers and sellers

13th October 2016

The NAEA have given their strongest indication yet that the 4th Money Laundering Directive will place a greater onus on estate agents and lettings agents to undertake client verification on both their sellers and buyers, and landlords and tenants.

During a panel session at The Property Ombudsman Conference, Mark Hayward, Managing Director acknowledged that “in all likelihood it (the 4th Money Laundering Directive) will include vendors and buyers, as well as landlords and tenants.”

Mark Hayward made reference to HM Treasury’s recent consultation on the implementation of the 4th Money Laundering Directive in which the question of client verification is specifically discussed:

7.13 In the UK, estate agents tend to act only for one of the parties to a transaction. As a result, the estate agencies often carry out customer due diligence on one of the parties to a transaction – their customer – who may be a vendor or a purchaser. The government has received representations that this is a weakness in the UK’s AML/CFT regime. This is because, for example, an agent acting for a vendor may not detect potential criminality on the side of a purchaser, and vice versa. Of course, an estate agent will be acutely aware of the need to report suspicious activity in accordance with the applicable money laundering and terrorist financing offences.

7.14 A similar issue could apply to letting agents as discussed above. Landlords are generally considered to be the main customer of a letting agent rather than a prospective tenant. Again, a letting agency will be acutely aware of the need to report suspicious activity in accordance with the applicable money laundering and terrorist financing offences.

With the following questions asked as part of the consultation:

Question 43: Do you think that letting agents should apply CDD to both contracting parties?

Question 45: Should estate agency businesses apply CDD to both contracting parties in a transaction in which they act as intermediaries?

The consultation invites views and evidence to inform the implementation of 4MLD and closes on 10th November 2016.

For more information and to respond click here: https://www.gov.uk/government/consultations/transposition-of-the-fourth-money-laundering-directive

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