Money Laundering and Sanctions Reporting

Money Laundering

Estate agents are regulated businesses under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended). If you are a letting agent who also conducts estate agency work, you must register and comply with these regulations. 

Additionally, specific letting agents (who do not perform estate agency work) are also covered by these regulations if they meet the following criteria:

  • The agent (firm or sole practitioner) performs "letting agency work," which is defined as:
    • Work done on behalf of a prospective landlord seeking to let land or property, or
    • Work done on behalf of a prospective tenant seeking land or property to rent, and
    • The tenancy agreement is for at least one month, and the monthly rent (or equivalent during part of the term) is 10,000 euros or more.

Agents meeting these conditions must:

  • Register with HMRC for anti-money laundering supervision.
  • Conduct a written risk assessment to identify potential money laundering risks.
  • Develop policies, controls, and procedures to manage these risks.
  • Perform customer due diligence (CDD), verifying the identities of landlords, tenants, and beneficial owners.
  • Report any suspicious activity to the National Crime Agency (NCA).
  • Provide ongoing staff training and maintain appropriate records.

Non-compliance can result in severe penalties, including unlimited fines and potential criminal prosecution.

For further detailed guidance, please refer to HMRC's official guide for estate and letting agency businesses.

Financial Sanctions Reporting

From 14 May 2025, letting agents have new reporting obligations under UK financial sanctions legislation, as they are being added to the list of "relevant firms." This means that letting agents must report promptly to the Office of Financial Sanctions Implementation (OFSI) if they know or have reasonable cause to suspect that a person (or entity):

  • is a designated person subject to financial sanctions (which can include individuals, companies, or other entities), or
  • has committed a breach of financial sanctions.

Because designated persons and their connected entities may not always be obvious, checking underlying beneficial owners and named individuals or businesses is crucial.

When you must report

These obligations apply irrespective of the monetary value of the rental agreement (there is no minimum rent threshold). The duty to report applies only to information discovered while carrying out "letting agency work". This also includes work carried out by relocation agents on behalf of prospective tenants when they are effectively providing letting agency services.

  • Prospective landlords

From the moment a landlord formally instructs you to act on their behalf, you must report suspicions relating to that landlord.

  • Prospective tenants

You must report suspicions relating to a prospective tenant from the moment a landlord has accepted the tenant's offer, and you are in the process of concluding the agreement.

Where you suspect or know that a person or entity is designated or that someone has committed a sanctions breach, you must report to OFSI:

  • The basis of your knowledge or suspicion.
  • Identifying details of the designated person (including entity details if it is a company).
  • Any funds or economic resources you hold for that person, if applicable.

Penalties for non-compliance

Breaches of financial sanctions can result in severe civil or criminal penalties, including fines and imprisonment. The government's enforcement of financial sanctions is robust, and letting agents should ensure full compliance to avoid liability.

For further detailed guidance, see the Financial sanctions guidance for letting agents, as well as OFSI's general guidance. Both should be read alongside your anti-money laundering obligations to ensure complete compliance.

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