Letting agents in England and Wales must ensure they are prepared for more stringent anti-money laundering (AML) rules which are set to come into force in the second quarter of this year.

From 14 May 2025, letting agents will be added to the list of ‘relevant firms’ under the government’s financial sanctions regulations, which will bring added responsibilities in relation to AML registration, customer due diligence (CDD) and reporting obligations.

Under the new obligations, letting agents will be required to report to the Office for Financial Sanctions Implementation (OFSI) any suspicions of financial sanctions breaches, whether related to landlords, tenants, or other parties involved in their transactions.

Letting agents must also identify designated persons (DPs), which are individuals or organisations under sanction or breaches of financial sanctions regulations and report any funds or economic resources managed for such individuals or entities.

Agents will also be required to ensure compliance is integrated into their business operations.

The OFSI, part of HM Treasury, believes that extending reporting obligations to this sector will encourage better sanctions compliance, as well as improve the OFSI’s understanding of how financial sanctions are being implemented in the impacted sector.

It also believes that the new requirements will raise letting agents’ “awareness of their sanctions obligations and assist OFSI in identifying potential circumvention of gaps and financial sanctions breaches”. 

Despite calls for its removal, the current threshold for AML supervision remains unchanged. This means the reporting obligations will apply to all letting agency work and not just in relation to lettings where there is a monthly rent of €10,000 or more.

However, UK-based professional membership body Propertymark believes that the upcoming changes to letting agents’ AML reporting requirements may create uncertainty.

“Propertymark has long argued that the existing threshold for AML supervision for letting agents should be removed to reduce the risk of cash payments being used to ‘clean’ dirty money,” said Nathan Emerson, CEO at Propertymark.

“Whilst we recognise that the UK government wants to tackle financial sanctions breaches that are occurring below the threshold, this is a missed opportunity to level the playing the field for letting agents in terms of AML supervision, Customer Due Diligence and financial sanctions reporting obligations,” he said.

“HM Treasury must continue to engage widely with the sector to avoid misinformation and confusion among agents and financial institutions.

Furthermore, we will continue to urge HM Treasury to reflect on the impact of the proposals and work to remove the threshold within the Anti Money Laundering Regulations to bring greater clarity to the sector and ensure it is less vulnerable to criminal activity,” said Emerson.

Read the OFSI guidance for letting agents here.

Compliance Solutions for Regulated Businesses

We can help organisations of all shapes and sizes from across different sectors undertake a review of their policies, controls, and procedures to ensure that they are compliant with AML regulations and, therefore, avoid any breaches.

A review of this nature provides valuable insight into a business when performed correctly. Along with an overview of risk, these crucial assessments also highlight issues within the business, so it is essential to undertake a proper review. All of a company’s building blocks must be considered, including its staff, clients, operations, and finances.

By working withthe Regulation & Compliance Office (RACO), a business can be assured that we will bring the required level of knowledge and expertise needed to perform the review, which adds value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that include:

• Consultancy.
• Compliance Policies.
• Training.
• Handbooks.
• Auditing.

Our services focus on businesses’ anti-money laundering and regulatory requirements through the implementation of effective policies, procedures, training, and consultancy. We also provide continued monitoring of staff and ongoing training to ensure that everyone within a business is aware of the latest requirements and complies with their responsibilities.

We offer a full range of services focused on ensuring businesses across all regulated sectors create, maintain and evidence their compliance with the requirements of their regulators and legislation. We work with businesses of all sizes, from the smaller high street or niche businesses to the large multi-office and multinationals.

Get In Touch

We adopt a sensible and pragmatic approach to fees, ensuring we are competitive and always add value. As necessary, we will agree on packaged services to control cost and enable clients to spread payments to alleviate cash flow, yet ensure services are provided when needed.

If you want to discuss our services in more detail, contact us at 0203 985 8550, email us at info@regulationandcomplianceoffice.co.uk or complete an enquiry form.