New AML & Sanctions Check Requirements from 14th May 2025 for letting agents
From 14th May 2025, the Government is adding Lettings Agents to the list of "relevant firms" with reporting obligations under Financial Sanctions regulations. This change is part of a broader effort to combat financial crime and ensure transparency within the sector. Find out how we are going to make sure our landlords remain compliant...
What are the current obligations?
Until now, the threshold for agents to carry out Anti-Money Laundering (AML) checks existed only on higher value tenancies with rents exceeding €10,000 per month (£8,300 approx). Something we don't really see in the areas we operate!
What's changing?
From 14th May 2025, new government legislation mandates that all UK letting agents conduct Anti-Money Laundering (AML) and financial sanctions checks on both landlords and tenants, regardless of the property's rental value.
As your letting agent, we are now obligated to:
- Verify the identities of all landlords and tenants
- Screen all parties against the UK's financial sanctions list.
- Monitor transactions for suspicious activity and report any concerns to the Office of Financial Sanctions Implementation (OFSI).
- Maintain comprehensive records to demonstrate compliance.
These measures apply to every tenancy, irrespective of the rental amount.
If you self-manage your own properties without an agent, you may still have responsibilities under the new regulations. It is advisable to consult legal professionals to ensure compliance.
What is a Sanctions check?
It screens individuals, entities, and countries against Government-imposed sanctions lists. These lists include parties banned from doing business with or through certain jurisdictions, often due to involvement in criminal activities like terrorism, corruption and financial crime, drug trafficking, and human rights violations.
Sanctions can include but aren’t limited to:
- Freezing financial assets
- Banning real estate transactions
- Imposing restrictions on financial services and investments
- Introducing travel bans
- Removing or denying visas
For letting agents, this means checking if a prospective tenant or landlord appears on the UK sanctions list and, if they do, reporting them immediately to the Office of Financial Sanctions Implementation (OFSI).
What is the impact on Letting Agency businesses?
We support the concept of protecting the property market from illicit activities, however the laws do add an additional layer of compliance for agents. Implementing these checks introduces additional responsibilities for letting agents:
- Increased liability: Ensuring compliance places greater legal responsibility on us.
- Administrative load: The verification process is time-consuming and requires meticulous attention.
- Systems: Checks need to be conducted via a third-party
- Staff training: Our team must be trained on the legislation, be able to handle these checks accurately, manage queries and report where necessary.
- Ongoing monitoring: Regular updates and reporting as part of our routine operations.
Introduction of a Compliance Fee
To manage these new obligations placed on us as an agent, we will have to introduce a nominal compliance fee. This fee will cover the costs associated with the additional administrative work, staff training, and systems required to perform these checks effectively. We are committed to keeping this fee as low as possible and ensuring transparency in its application.
Our commitment to landlords and tenants
We understand that regulatory changes can be daunting. Our priority is to make this transition seamless for you by:
- Handling all compliance checks on your behalf.
- Providing clear guidance on any information or documentation required from you.
- Keeping you informed about any developments or additional requirements.
Our goal is to ensure that your properties remain compliant without adding undue stress to your responsibilities as a landlord.
For both landlords and tenants, partnering with a well-prepared letting agency is crucial. Agencies with robust screening systems not only ensures compliance, but full peace of mind by safeguarding all parties involved in property transactions. Effectively, working with us can help minimise the risk of inadvertently engaging with sanctioned individuals.
What happens next?
If you are an existing landlord of Sandersons UK, you're in safe hands! As you know from our action around the proposed changes under the Renters Rights Bill, we are a proactive team always looking to get ahead of legislation changes.
In the coming weeks, we will reach out to existing clients with detailed information on the compliance process for landlords and tenants, including any actions needed from your side and the exact fee structure.
All prospective clients should be aware that this will become a new part of the onboarding process with any letting agent. If you have any questions or need further clarification, please do not hesitate to contact us.
We appreciate your understanding and cooperation as we adapt to these new regulations together. If you would like to read the full Government legislation please click here.
FAQ's
If two landlords own a property, do I check them both?
Yes, you must check each individual landlord against the UK sanctions list.
Do agents need to check a company?
Companies can be sanctioned so yes, letting agents must check the company and the named directors if the landlord is a company.
Should the agent check Guarantors or Permitted Occupiers?
The OFSI regulations do only specify prospective tenants and landlords. Industry discussions are suggesting a cautious approach and that guarantors should be checked, particularly for student tenancies where they are more likely to be the party paying the rent.
Do agents need to check all existing landlords and tenants?
The legislation only talks about prospective landlords and tenants meaning letting agents do not necessarily have to do this and it only applies to new tenancies after 14/05/25. At the point a property is re-let the landlord will need to be checked prior to marketing then the new tenant at the point of referencing
Do we have to check students?
Yes. The regulations do not distinguish between tenant types, just refer to prospective tenants.
Do we need to do sanctions checks for let-only landlords not using our managed service?
Sanctions checks must be performed on all prospective landlords and tenants, irrespective of the type of letting arrangement. The Lettings Hub would recommend regular ongoing monitoring is particularly for longer-term or repeated engagements.
Do the changes apply to all agents or are smaller ones excluded?
Yes, the mandatory sanction checks are for all agents no matter the size of the letting agency.
Can the landlord complete their own Sanctions check on a tenant?
No, the OFSI regulations apply to letting agents from May 14th 2025, not landlords. A landlord can't carry out the checks.