Propertymark says banks are still misinterpreting Anti-Money Laundering rules regarding pooled client accounts, making life difficult for letting agents.
The trade body says it’s routinely battling with banks, industry groups and government officials on behalf of members who have unnecessarily had accounts closed or restricted as they fall outside of the scope of AML regulations because they do not manage high-value properties with monthly rental incomes of 10,000 euros or more.
Propertymark letting agent members have reported that banks are asking them to carry out Customer Due Diligence to the level as set out in the Money Laundering Regulations when not all letting agents are legally required to do so.
The agents’ body says one solution to this is for the UK government to remove the EUR 10,000 monthly rent threshold and set this at zero to create consistency and cover all tenancies let in the private rented sector.
Therefore, all letting agents would be required to register with HMRC for Anti-Money Laundering Supervision which would provide banks with the reassurance they need and reduce a barrier that can make it hard for agents to operate.
Banks are also being reminded that rather than making arbitrary decisions they should be referring to updated industry guidance from the Joint Money Laundering Steering Group - the forum that should be the final decision-maker.
Propertymark lobbied for the JMLSG guidance to be improved and now says it’s frustrated at the inconsistency for its members because not all banks are following it. The guidance is not legally binding but has HM Treasury approval.
Propertymark compliance manager David Oliver says: "This is a frustrating, time consuming and unnecessary issue for our members especially when the banking industry's own guidance from the JMLSG is clear that the legal requirement for CMP and our own regulatory rules as a professional body should be enough to satisfy any risk.
"For letting agents, it is simply not feasible to have separate accounts for each of their clients or even necessary if they are Propertymark members because of the protections in place through our compliance process that requires them to provide details of their CMP on an annual basis.
"We are continuing to engage directly with banks, the financial sector and governments and would also encourage any members that have pooled client accounts closed to use the JMLSG guidance and their Propertymark membership to confidently challenge those decisions."
One solution is for letting agents to use a Client Accounting Service Provider which is a third-party organisation that manages client money on behalf of the agent.
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Several years ago Lloyds. Of which I was a customer for over 30yrs asked us to get a signed document from each person/tenant and landlord that paid into our client account each month ie the rent. That would mean that every month I would have to visit every tenant and ask them to sign the form for money laundering and also see their ID. I complained and they gave some compensation, but would not budge on this. I had to move banks.
I then had a money laundering issue that I had tried to raise with them. The police came straight to my office and could not believe that the bank manager would not even deal with me in person, he said that it was not a money laundering issue, (this was money paid from a diplomat in Africa), the phone line that the bank called put the phone down on them twice. The girl there was shocked as even she couldn’t get any help. When I said I wanted her name as the contact for this, she right got very upset and the assistant manager then dismissed the matter. The bank DID NOT DO ANYTHING. this was a serious matter that they ignored it. When the police turn up they do not mess about with these things, however they didn’t even talk to the bank. But kept reminding me of the possibility of a prison sentence of up to 14yrs :)
I own both a Letting Agent and a Block Management company; I will not name our banks.
We have finally received conformation from our bank that holds our Letting client account that they will not be closing it; it has taken a long time to reach this point.
Our individual Block client accounts are presently under scrutiny and opening new individual accounts a challenge.
To be fair to our Lettings bank; my business manager (who knows me and understands our business activity) arranged a zoom call with a London executive manager (blank screen, audio only I may add), and he listened and remarked that their 'model' was not ideal for our business activity and he would report this back to the policy makers. The bank was obsessed by what trade associations we were members of and The Property Ombudsman was not sufficient (despite many schemes deferring to the TPO); we also hold the appropriate CML insurances.
Hello Angus,
I also own both a Letting Agent and a separate Block Management company. Would you know if we can use one client account for both businesses ?
Thanks
Isaac
Lloyds are the worst, they have no clue, I have had this issue with them a number of times dealing with their Client Money Support Team is painful they are Clueless and Arrogant and clearly don't understand the purpose of a letting agents client account.
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