New Anti-Money Laundering Requirements for Letting Agents: What You Need to Know

From 14th May 2025, letting agents in the UK will face new financial sanctions reporting obligations as part of expanded anti-money laundering (AML) regulations. These changes, introduced by the HM Treasury Office of Financial Sanctions Implementation (OFSI), aim to strengthen the fight against financial crime. This article provides an overview of the new requirements, their implications for letting agents, and the practical steps you can take to prepare for compliance.

Under the updated rules, letting agents will now be classified as “relevant firms” under financial sanctions regulations, meaning they are obliged to report any known or suspected breaches of financial sanctions laws. This new responsibility aligns with existing obligations for high-value dealers and art market auctioneers.

Letting agents must report to OFSI if:

• A client is a designated individual under sanctions laws, or

• There is evidence or reasonable suspicion of a breach of financial sanctions regulations.

These suspicions might arise during property lettings, for example, when a landlord instructs the agent or accepts a tenant’s offer. Reports are not required for tenants before their offer is accepted.

Reporting Process

Letting agents must use a Compliance Reporting Form, which is submitted via email along with supporting documentation to OFSI. Detailed guidance is available on the OFSI website.

Key Differences from Existing AML Rules

Since January 2020, letting agents handling properties with monthly rents exceeding €10,000 (around £8,200) have been required to comply with AML regulations. This includes registering with HMRC, conducting customer due diligence, and reporting suspicious transactions to the National Crime Agency (NCA).

The new OFSI obligations apply to all letting agents, regardless of rental values, and focus specifically on financial sanctions breaches rather than broader money laundering concerns. This expansion increases the scope of compliance for letting agents, ensuring even small-scale agencies must engage in financial crime prevention.

Implications for Letting Agents

Broader Compliance Scope

With no rental value threshold, every letting agency will be required to assess client relationships for financial sanctions compliance. This significantly expands the number of agents affected.

Increased Administrative Burden

Agents must now integrate new processes into their existing AML compliance efforts, including training staff, monitoring transactions, and maintaining documentation for financial sanctions compliance.

Potential Penalties for Non-Compliance

Failure to report suspected breaches can result in fines or other penalties. Letting agents must ensure they understand and fulfil their obligations to avoid regulatory action.

How to Prepare

To meet the new requirements, letting agents should take the following steps:

1. Understand the Rules

Familiarise yourself and your team with the financial sanctions regulations and reporting requirements. Resources and training are available through Propertymark and OFSI.

2. Implement Screening Processes

Introduce robust screening mechanisms to check whether clients are designated individuals or linked to breaches. Screening software can help automate this process and flag potential issues.

3. Train Your Team

Provide training for all staff on identifying red flags, completing compliance forms, and reporting to OFSI. Ongoing education will be critical as regulations evolve.

4. Maintain Detailed Records

Ensure all documentation related to client transactions, screening results, and communications are stored securely for auditing purposes. Accurate record-keeping is a cornerstone of compliance.

5. Seek Professional Guidance

Work with legal or compliance experts to audit your existing processes and ensure alignment with both AML and OFSI requirements.

The Bigger Picture

Propertymark has highlighted the increasing complexity of compliance for letting agents. While they welcome stronger measures against financial crime, they have advocated for simplifying regulations by removing the €10,000 AML threshold. A uniform approach to AML and OFSI compliance across all letting agents would make adherence clearer and more efficient.

For letting agents, these new obligations are an opportunity to demonstrate professionalism and commitment to ethical business practices. Proactive preparation and investment in compliance processes will not only protect your agency from penalties but also enhance your reputation in the industry.

With an increased administrative burden, let Executive Property Management Solutions take your property management off your hands. It will free up more time to manage your other compliance and business operations. Find out about our packages here.