The Fifth Anti-Money-Laundering Directive (5AMLD) arrives January 2020. The directive is designed to tackle money laundering and its newest iteration will affect the property sector.
5AMLD introduces new rules around ‘beneficial ownership’ and high-value rentals that some organisations will need to be prepared for.
Here’s a closer look at: the directive itself, who will be affected and what you need to do if you’re having to comply with anti-money-laundering regulations for the first time.
5AMLD is the fifth iteration of a directive that dates back almost 20 years. The Anti Money Laundering Directive has been continually updated ever since its introduction in 1990.
The idea behind the Anti Money Laundering Directive is to make transactions more transparent so that it’s harder for money launderers and terrorists to move their cash around the EU.
By its nature, it’s hard to know the true extent of money laundering activity – but the United Nations Office on Drugs and Crime puts it at somewhere between 2% and 5% of global GDP each year. This works out as roughly €712bn to €1.87tn. The National Crime Agency estimates £100bn+ is laundered through the UK each year.
Until now, the anti-money-laundering rules have affected banks, accountants, building societies, lawyers and gambling operators, among others. However, new sectors will be affected when 5AMLD goes live in January 2020, and already-affected organisations may find they have to comply with new rules.
From January, estate agents and intermediaries for rental properties with monthly rents of €10,000 (£8,913 at the time of writing) or more will fall under 5AMLD’s jurisdiction. While most of the UK’s estate agents won’t be affected by this change, a quick property search on Rightmove proves it’s likely some in London will.
Those affected will now have to verify the identities of their customers for anti-money-laundering (AML) purposes.
The other aspect of 5AMLD that pulls the property and legal sector into its jurisdiction is the ‘beneficial ownership’ part. The beneficial owner of a company/trust is the person(s) who directly (or indirectly) owns or controls it.
Under 5AMLD, Information on real estate ownership must be registered and made accessible to public authorities. In order to stay compliant, those affected will have to identify the beneficial owners of properties and verify their identities.
Jonathan Jensen, GBG’s Commercial Director Identity Verification said: “The increased scope of customer due diligence checks in 5AMLD means that all regulated entities will need to review when and how often they verify the identity of their customers.
“5AMLD confirms that establishing beneficial ownership is becoming an increasingly important factor in the fight against financial crime.”