Lettings agents (and a fair few estate agents) have long been a little blind to the requirements of money laundering, sanctions, and proceeds of crime legislation. I am frequently told by letting agents that they do not need to worry about this as they do not deal with high value tenancies and so do not need to worry about the money laundering regulations. This is true as far as it goes but ignores the fact that everyone is bound by the Proceeds of Crime Act and obligations not to deal with sanctioned property.

These relaxed attitudes will not be sustainable from May this year. As from 14 May 2025 all letting agents (regardless of the value of the rent being dealt with) will be bound by amended guidance and regulations made by the Office of Financial Sanctions Implementation (OFSI). To a large degree this is a repeat of existing obligations. All agents should be considering whether they are dealing with people who are sanctioned and whether they are dealing with the proceeds of crime. However, this change will make things much clearer.

Moving forward the obligations from 14 May will mean that anyone being instructed by a prospective landlord or tenant to find land to let for a month or more will need to conduct sanctions checks on the landlord (at the point of instruction) or on the tenant (before concluding a letting agreement). There will be exceptions as usual for anyone who is merely providing and advertising service. You will need to be doing more than just advertising property and putting landlords and tenants in contact with one another. But it will capture letting agents doing let only deals if they are negotiating and preparing a tenancy agreement as well as anyone doing more than this, such as rent collection or property management.

It will be necessary to identify the relevant person and then if they are believed to be subject to sanctions then it will not be possible to deal with them and they must also be reported to OFSI. Undoubtedly there will be lots of companies offering to deal with this for agents for varying sums of money. For some agents this will be worthwhile but in practice it is possible to do most of this without using additional services. The list of sanctioned individuals can be found on HM Treasury’s consolidated list and this is searchable. Reporting details can be found in the OFSI general guidance on sanctions in section 5.

This is a new obligation and some agents will see it as a substantial imposition but I do not see it as a big deal in practice. Agents ought to be checking who their landlords are as they take them on and it adds little extra work to obtain confirmation of identity and check if the names appear on the consolidated list. Tenants should be having their identity checked anyway as part of Right to Rent checks and again it does not add a lot of extra work to check these names against the consolidated list.

I have some doubt as to whether this will have any appreciable effect in terms of identifying financial or discouraging financial crime. Presumably there are relatively few Russian people renting in the UK at this stage and asking all letting agents to look out for them is not very likely to scare them off! That said the penalties for non-compliance are severe and I expect most agents will deal with this to make sure they are complying. It seems a bit unfair though when agents are scrambling to deal with the changes created by the Renters’ Rights Bill to throw this additional obligation into the mix.