From 14 May 2025, new financial sanctions regulations come into force, placing tighter compliance obligations on letting agents throughout the UK. These changes are aimed at preventing the property market from being used for criminal activity such as money laundering or facilitating transactions with sanctioned individuals and entities.
What Needs to Be Checked?
The core requirement is to check if any party involved in the letting process appears on the UK Government’s Consolidated List of Financial Sanctions Targets. Specifically, you must:
– Verify the identity of the landlord or beneficial owner of the property , and check prospective tenants’ identities
Confirm full name, date of birth, current address, and relevant identification documents as follows:
| For Individuals | |
| Primary ID (at least one) |
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| Proof of address (if not included in primary ID) |
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| For Companies | |
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| For Trusts |
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Certified copies of these documents should be kept securely for at least five years.
– Screen both parties against the sanctions list
Use official databases to confirm that neither the landlord nor the tenant is a designated person or entity under financial sanctions. To carry out these checks properly, letting agents should use the official resources provided by the UK government. The most up-to-date list is maintained by the Office of Financial Sanctions Implementation (OFSI) (https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets). We recommend keeping a copy or screenshot of your search result, including the date, as part of your compliance records.
When Must These Checks Be Carried Out?
For landlords: at the point of formal instruction, before marketing or managing the property.
For tenants: after landlord accepts the offer, before finalising agreement.
For existing clients: at trigger events such as tenancy renewal, changes in ownership, or if suspicion arises.
Ongoing Requirements: When to Update Checks
– At tenancy renewal
– When there are changes to parties involved
– If suspicion arises
– During regular internal reviews
Reporting Suspicious Findings
If an agent discovers or suspects that a landlord, tenant, or associated party is on the sanctions list, this must be reported to the Office of Financial Sanctions Implementation (OFSI) immediately (https://www.gov.uk/guidance/sanctions-reports).
It is crucial to understand that once a report is made to OFSI (or if you there is an investigation), nobody must inform the individual concerned as this is an offence of “tipping off”. Tipping off is a serious criminal offence under both the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000.
What counts as tipping off?
– Informing the person that they are under investigation
– Letting them know a report has been made about them
– Advising them to take action that could prejudice an investigation (e.g., withdrawing funds or cancelling transactions)
If convicted, tipping off can lead to imprisonment and substantial fines.
Penalties for Non-Compliance
Failure to comply with these regulations can result in severe consequences, including:
– Civil penalties: OFSI can impose fines of up to £1 million or 50% of the value of the breach, whichever is higher.
– Criminal penalties: In the most serious cases, individuals can face up to 7 years’ imprisonment.
It is also worth noting that OFSI has the power to “name and shame” businesses that have breached sanctions, even if the fine is settled.
Record-Keeping Requirements
Keep detailed records for at least five years, including:
– Copies of all identification documents
– Sanctions list search results
– Dates of checks
– Any reports made to OFSI
– Evidence of staff training and compliance procedures
Robust records are your best defence in the event of an audit or investigation.
