The UK, along with other EU member states has until January 2020 to implement the 5th Money Laundering Directive (5MLD). Provided the UK is either within the EU or is within and agreed transitional period it will be required to implement the Directive. If the UK has left then it may not be obliged to implement the Directive but will be under considerable pressure to do so.
The 4th Money Laundering Directive considerably tightened the regime for estate agency but left lettings agency out of scope. 5MLD does not bring all lettings agency into the regime but does where the rent for the property is over €10,000 per month. That is approximately £8,650 at the time of writing. So very high value property rentals will oblige agents to carry out full money laundering checks on the landlord and tenant. For a small number of agents this will be a substantial new burden which will involve considerable extra effort as they will not only have to consider the identity of tenants (something they are already doing for Right to Rent purposes) but also consider the provenance of the funds being used to pay the rent as well as whether the tenant is a Politically Exposed Person (PEP) who might conceivably have obtained funds illicitly as a result of their position. This will be a considerable burden in the high-value property market where a significant number of tenants may be PEPs and may not be happy to discuss the source of their finances.
Additionally, there will be considerable extra work for government and estate agents, again particularly in the higher end market, as 5MLD imposes substantial new obligations regarding trust relationships. 5MLD requires that any trust must have its beneficial owners identified and opens access to that information to any person with a legitimate interest. It is common for higher value property to be owned in the UK via a trust in order to disguise who the actual owners are. As much for reasons of privacy as anything else. However, those arrangements will not longer be as private as they once were once 5MLD comes into force and, looking at the widening of data about corporate ownership that is also part of 5MLD, there will be concern that trust beneficiary information will eventually be moved into the public domain.
For many estate and letting agents the changes wrought by 5MLD will be of little interest to them. For a smaller number of agents the changes will increase their workload substantially and considering how to respond to the challenges is something that should begin now.