From yesterday, 14 May 2025 agents are required to check landlords and tenants, and self-managing landlords are required to check their own 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.
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.”
Landlords and agents need to be aware of relevant anti-money laundering recommendations and regulations to effectively implement their AML checks. There are basically 4 stages to this:
Due Diligence: you 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, landlords and 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.
Landlords and 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 yesterday (14 May 2025) letting agents and private self-managing landlords are designated for AML purposes as “relevant firms” under the recently updated UK financial sanctions regulations. This means that landlords and letting agents now come under the same AML checking regime as estate agents did previously, and as did law firms and financial institutions.
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
In response to the start of the new regulations, Nishma Parekh – Goodlord’s director of referencing has commented:
“Every single landlord and tenant, no matter the rental value, must now go through sanctions checks. With four in five landlords feeling unprepared for the changes, it’s vital that they get their ducks in a row immediately if they want to stay on the right side of the law. If they fail to comply – even if it’s a genuine mistake – they could be facing unfathomable fines of up to £1m.”
To stay ahead of these changes, we’ve upgraded our tenant referencing to include automated AML screening as standard.
In summary, in practice all private self-managing landlords and letting agents must now check tenants, landlords and guarantors against the UK sanctions list as well as the other checks outlined above. They must freeze any assets or property held by them for a sanctioned individual or organisation and 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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