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Shock as letting agents could be told by banks to do anti-money laundering checks on all clients – despite directive

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A letting agent has been told by his bank that it requires Politically Exposed Persons checks to be done on all letting clients.

This is despite the fact that letting agents do not have anti-money laundering duties under the latest directive which came into effect in late June.

Handelsbanken has confirmed to EYE that it does indeed require the clients of letting agents who have client accounts with it to be screened for anti-money laundering purposes because the bank itself has to comply with the AML Regulations.

This is not something that has been flagged up to agents previously but has wide-ranging implications for the industry.

The requirement – likely to be imposed by other banks – emerged after a branch of Handelsbanken told Mike Cole, group managing director of Imagine, which has branches in Hertfordshire, that his business must carry out AML checks.

It told him the requirement is essential for the bank to adhere to the Financial Conduct Authority’s rules on client accounts.

Cole was told that if he does not comply, the client account facility will be withdrawn.

Cole told EYE: “The recent update in Money Laundering Regulations states clearly the rules don’t apply to letting agents. But of course any letting agent has a client account.

“The bank themselves could see these two pieces of advice were totally at odds with each other, but insisted their problem was to do what they were told was necessary and as such are insisting we need to match their own money laundering policy on our client account.

“This would mean hundreds of new checks at additional financial and time cost to our business.”

He said that neither he nor the bank was clear whether the checks should be on landlords, or on both landlords and tenants.

He said: “If it is tenants, do we have to check on every sharer?

“I’ve not heard any other agents highlight this issue, but my bank insists it’s all banks and that this will be applied across the board in due course.”

He said he was told that HSBC is already adopting the same approach as Handelsbanken.

Cole said he was given the strong impression that all banks are becoming “paranoid” about client accounts across the board because of the risk of them being blamed for allowing a Politically Exposed Person to do money laundering.

Cole added: “They said they have to check 1% of our cases each quarter. But of course the only way for us to guarantee we pass those checks was for us to have checked everybody – so the workload on them is minimal but on the agent massive.”

Yesterday evening Handlesbanken confirmed to EYE that it does require checks.

A spokesperson said: “Whilst letting agents are not necessarily subject to the Money Laundering Regulations 2017, Handelsbanken has a duty to ensure it complies with the Regulations.

“This means that the underlying customers and the beneficial owners of any client account provided by the bank have to be screened, and the bank has to be satisfied that the appropriate due diligence has been performed and passed.”

EYE has also asked HSBC about their AML requirements for letting agents with client accounts. We have also asked the FCA for clarification.

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Source:: Shock as letting agents could be told by banks to do anti-money laundering checks on all clients – despite directive