From 14 May 2025, letting agents are legally required to carry out anti-money laundering (AML) and sanctions checks on landlords, tenants, and guarantors. These checks must be made against the UK’s official sanctions list, bringing letting agents into line with estate agents and other regulated firms.
What are AML checks?
AML checks are legally required measures designed to prevent financial crime and ensure compliance with regulations set by HMRC and the Financial Conduct Authority (FCA). They involve verifying identities, understanding where funds come from, assessing risk, and monitoring for suspicious activity.
Much of this overlaps with existing Right to Rent and tenant referencing checks. Many reputable credit referencing agencies now include AML and sanctions screening as part of their standard services.
If checks identify suspicious activity or a match on the UK sanctions list, agents must freeze any related property or assets and report immediately to the Office of Financial Sanctions Implementation (OFSI). In some cases, reports may also need to be made to HMRC or the National Crime Agency (NCA).
Who is responsible?
Government guidance confirms that letting agents are now classed as “relevant firms” under financial sanctions regulations. Landlords are not required to carry out AML checks unless they are acting as agents themselves, although voluntary checks are considered good practice.
Key AML obligations for letting agents
Letting agents must:
- Carry out due diligence: verify identities, assess risk, and monitor transactions
- Keep records: maintain accurate records of checks and transactions
- Train staff: ensure employees understand AML rules and procedures
- Review procedures: regularly update AML policies to stay compliant
Record keeping and data protection
Agents must securely store identity documents and verification records for at least five years. This personal data must be protected using secure digital storage (such as encrypted cloud systems or property management software), with access limited to authorised staff. Paper records must be stored securely and destroyed after five years in line with data protection laws.
The UK sanctions list
The UK sanctions list identifies individuals and organisations subject to sanctions for reasons such as money laundering, terrorism, or serious crime. Agents can search the list online, but this does not replace the need for full due diligence.
If a person is confirmed or reasonably suspected to be sanctioned, agents must freeze assets and report to OFSI without delay.
Checks alongside referencing
While landlords are not legally required to carry out AML checks, many referencing agencies do so automatically. For example, some providers now integrate automated AML screening using trusted global data sources to reduce administrative burden and false positives.
Risks and penalties
AML breaches can affect agents of any size. HMRC enforces compliance, with fines ranging from £1,500 to £50,000, plus possible administration charges and public naming. Ongoing staff training is essential to avoid penalties.
Summary
- Landlords are not legally required to carry out AML checks but may do so voluntarily
- Letting agents must now carry out AML and sanctions checks by law
- Checks must include landlords, tenants, and guarantors
- Any matches or suspicions must be reported to OFSI immediately
- Records must be kept securely for five years
This article applies primarily to England and is not a substitute for professional legal advice. Use it as a starting point for further research.