Many letting agents fail to conduct the obligatory identity checks on landlord clients according to an industry supplier.
Blinc UK says that while in its experience sales agents strongly enforce the check, letting agencies are less likely – often not conducting Anti-Money Laundering or Know Your Customer checks.
The supplier says agents should prioritise completing the KYC checks to ensure the person they are dealing with is who they say they are, and that they genuinely own the property that the agent is going be managing.
Currently AML checks are only required for rental transactions worth more than £8,900 per month. However, there is a liability on agents to carry out basic checks on landlords.
Failure to do so can cause problems – for example, if it transpired a property was being used for criminal activity such as money laundering, agents may be required by the police to provide all the information they hold on the landlord. If they failed to carry out checks on the landlord’s identity and history, they could find themselves with a significant legal issue.
They also have a duty of care to tenants to ensure the right checks have been carried out on the landlord before they take their funds and move them into the property.
“Letting agents are engaging in a financial transaction with their landlord so need to carry out the necessary identity and property ownership checks” says Blinc UK director Darren Bignall.
“These kind of things are never a problem until they become a problem and at this point they can become a significant problem. Agents can pay a small amount of money to carry out these basic checks from the outset and reduce the chances of a fine or custodial sentence in the future.
“Although AML checks are not currently required for most rentals, it makes sense for agencies to get ahead of the curve and prepare now as they are highly likely to become mandatory in the future,” he adds.
The company says digital identity checks can help letting agents make basic remote checks on landlords in a quick and simple way.
With virtual AML and KYC checks, agents can validate the identity of property owners without having to meet them in person. All they need is their name and email address and they can send them a link to carry out the checks.
“Although many agents carry out some form of checks, they don’t always validate the identity of all property owners. Sometimes they meet just one landlord and receive ID for any joint owners without meeting them or speaking to them” Bignall says.
“Carrying out virtual checks is quick, easy and affordable way for letting agents to have the necessary protection in place when taking on properties from new customers” he concludes.
This post has originally been featured in Letting Agent Today.