From yesterday, 14 May 2025 agents are required to check landlords and tenants by making anti money laundering (AML) checks; these checks are now required to be made against an official list, the UK’s official sanctions list.
See also: Financial sanctions guidance for letting agents here
These are checks that businesses are legally required to make to prevent financial crimes and comply with regulations, mainly those rules set by the Financial Conduct Authority (FCA) and HM Revenue and Customers (HMRC).
The checks involve verifying customer identities. These IDs are also required for Right to Rent checks on tenants in any case, so checking identities, assessing their risk levels, and monitoring transactions for suspicious activity can be combined in most circumstances. Most reputable credit referencing agencies will now carry out these checks when credit checking and referencing tenants
Identification and Verification checks involve confirming a tenant's identity through documents like passports or driving licenses. Landlords and agents need to be aware and understand where the tenant’s money is coming from and why, to ensure it's not coming from criminal activities.
If AML checks reveal suspicious activity, agents and landlords are legally required to freeze any property or assets and report the matter to the Office of Financial Sanctions Implementation (OFSI) without delay. It may also be appropriate to report to HMRC or the National Crime Agency (NCA).
Businesses - and this includes letting businesses - must regularly review and update their AML policies and procedures to stay compliant with evolving regulations.
Propertymark defines sanctions checks as “a screening process used to determine whether a person or organisation appears on a government or international sanctions list.”
Note: This article applies primarily to England and is not a full interpretation of the law. Always seek professional advice before making or not making decisions. Use this guide as the starting point for your research, not an endpoint.
There has been some confusion about whether the AML rules now apply to landlords as well as letting agents. The government guidance on this says that letting agents are being added to the list of relevant firms, that is similar to estate agents, and therefore landlords don't come under this category unless they are acting as agents themselves.
Letting agents need to be aware of the relevant anti-money laundering regulations to effectively implement their AML checks. There are basically 4 stages to this:
Due Diligence: letting agents must verify the identity of customers and assess the risk associated with their personal or business relationships. These procedures would typically involve collecting ID documents, conducting background checks, and monitoring customer activity for suspicious transactions. If you are using a reputable credit and referencing agency these checks are usually included.
Keeping records: you are required to maintain accurate, comprehensive records of or transactions such as letting properties, payment activity, and your AML compliance efforts.
Training and education: if you have employees, they need to receive ongoing training and education on the current AML regulations, procedures to be followed and the best practical way to do them. best practices.
Regular checks: your AML procedures should be subject to regular checks to make sure they comply with the current regulations. For larger organisations this may entail internal and external audits.
Keeping records
Under the new rules, letting agents must keep and safely store copies of their identity documents and the verification checks they made for at least five years. They must do this to comply with the regulations and in case of an audit.
This is personal data which would be a serious security risk unless stored securely. To ensure this digital storage with encryption including Google Drive, Dropbox, or property management software is recommended.
Access to the data must be restricted to authorised personnel. Paper documents must be stored securely and shredded after five years to comply with data protection laws.
The Information Commissioner's Office (ICO) emphasizes that personal data in paper records is covered by data protection laws, especially if it's part of a filing system or intended to be processed in a digital format.
The UK sanctions list is provided by the government to enable users to find information relating to all designated persons under sanctions regimes implemented in the UK.
Letting agents can use the search function online but be aware, doing this does not remove your obligation to undertake all the other appropriate checks including due diligence in respect of designated persons. Reliance on, or use of, the information contained in the search results does not limit any criminal or civil liability.
These lists may include individuals or entities linked to money laundering, terrorist financing, human rights violations, organised crime, or political corruption and other national security threats.
If a person or company is identified on the UK sanctions list, or if there is reasonable cause to suspect they are, the landlord or agent is legally required to freeze any property or assets and report the matter to Office of Financial Sanctions Implementation (OFSI) without delay.
From Wednesday 14 May 2025 letting agents are designated for AML purposes as “relevant firms” under the recently updated UK financial sanctions regulations. This means that letting agents now come under the same AML checking regime as estate agents did previously, and as did law firms and financial institutions.
Landlords are not required by law to carry out these checks but if they use a reputable reference agency many of them carry out AML checks as a matter of course. There's not reason when landlords can't do the necessary checks voluntarily as it's good practice.
www.lettingaproperty.com says that to stay compliant and reduce admin for their clients, they’ve added AML screening directly into their referencing process.
They have partnered with RentProfile to deliver automated AML checks using trusted global data sources, including:
Importantly, www.lettingaproperty.com will only report confirmed UK Sanctions matches to OFSI. However, they say that all flagged results are reviewed with a mix of automation and human oversight. “This reduces false positives—currently about 90% of
To stay ahead of these changes, we’ve upgraded our tenant referencing to include automated AML screening as standard.
Letting agents can be affected by anti-money laundering no matter the size of the company. Larger agents might get caught out by not being fully compliant or following the regulations properly. Smaller letting agents may face issues with banks who don't fully understand the legislation, so it is key for letting agents to understand their rights.
It is key for letting agents to be aware of possible implications such as:
The risks
Letting agents can fall foul of money laundering no matter what the size of the agency. Staff training is essential to ensure compliance at all times. Fines for non-compliance with Anti-Money Laundering (AML) checks range from £1,500 to £50,000. HMRC, the UK's tax and customs authority, is responsible for enforcing AML regulations and issuing fines. Penalties can also include a £1,500 administration charge. Additionally, firms may be named and shamed in a follow-up list published by HMRC.
It is important for letting agents to make sure that landlords and tenants are not letting or renting properties with illicit funds, that they aren't paying with illicit funds or are part a criminal group, laundering money under the guise of the rent payments. Guarantors likewise, must be checked.
In summary, it is not compulsory for landlords to carry out the AML checks, though they can do so voluntarily, which would be good practice. Reputable reference agencies are now doing this automatically.
Letting agents must now by law do the checks, checking tenants, landlords and guarantors against the UK sanctions list, as well as the other checks outlined above. If their clients are found to be laundering money their assets must be frozen, or property held for a sanctioned individual or organisation. Agents must report any matches or suspicions to the OFSI without delay. They are also obliged to keep records of checks made and any actions taken for five years.
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