New Sanctions Rules: a Letting Agent's Guide

[UPDATED 19/06/2025]

From 14 May 2025, it became a legal requirement for all UK letting agents to check tenants, landlords, and other clients against the UK’s official sanctions list. If someone is on the list—or even if a possible breach is suspected —they must report it to the government’s Office of Financial Sanctions Implementation (OFSI).

Sanctions checks are already a standard part of Anti-Money Laundering (AML) due diligence, but for the first time, these checks are now a separate legal requirement in their own right.

So, what does that mean for agents?

What is a sanctions check?

A sanctions check is a screening process to ensure a person or organisation isn’t on a government or international list of restricted individuals or entities.

Sanctions lists include those linked to:

• Money laundering
• Terrorist financing
• Human rights violations
• Organised crime
• Political corruption and other national security threats

These checks help prevent illegal or high-risk individuals from entering into business relationships — including tenancy agreements.

If someone is on the sanctions list, or even if you have reasonable cause to suspect they are, you're legally obliged to freeze any assets or property and report them to the Office of Financial Sanctions Implementation (OFSI).

Sanctions Checks vs. PEPs: What’s the Difference?

Although Politically Exposed Persons (PEPs) are also flagged in AML checks, they are not the same as sanctioned individuals.

Some PEPs do appear on sanctions lists, especially if involved in illicit activity — which is why many providers screen for both together.

Why are agents affected now?

Letting agents have now been classified as “relevant firms” under the UK’s updated sanctions regime. That means agents are subject to the same obligations as banks, law firms and estate agents when it comes to identifying and reporting designated persons.

This change brings letting agents fully into the sanctions enforcement framework – and failing to comply could result in significant penalties, including criminal prosecution.

What are agents required to do?

Letting agents are now legally required to:

✅   Check tenants and landlords against the UK sanctions list

✅   Freeze any assets or property held for a sanctioned individual/entity

✅   Report any matches or suspicions to the OFSI immediately

✅   Keep records of your checks and any actions taken

How does this affect day-to-day lettings?

If you're already following Anti-Money Laundering (AML) regulations, you may be carrying out sanctions checks as part of your onboarding process.

However, the new rules apply regardless of whether your agency is subject to AML regulations—meaning you can no longer assume AML compliance covers your sanctions obligations. Instead, sanctions checks must now be part of your routine identity verification (KYC) process for all landlords and tenants.

It’s important to let landlords and tenants know that agents are now legally required to confirm their identity and check whether they appear on the UK’s financial sanctions list. This may occasionally cause small delays when securing tenants, but it’s a necessary step to remain compliant.

Note: The AML supervision threshold stays the same — you don’t need to register for AML supervision unless you handle monthly rents over €10,000.

How to Carry Out Sanctions Checks

There are several ways to check if someone is on the sanctions list:

The UK Sanctions List  published by the Foreign, Commonwealth and Development Office

The OFSI Consolidated List of Financial Sanctions Targets

Commercial Sanctions tools, or AML tools which include automatic sanctions screening

Integrated AML platforms that bundle AML and sanctions into one step

If using the official lists manually, you need to search names carefully and document your results.

Should you find someone on the list—or even suspect a possible breach—you must report it. You can find more details on reporting to the OFSI, including a ‘Compliance Reporting Form’, on this page.

What should agents do?

Make sure your team is aware of the change and that you have carried out the following:

✅   A review and update of your AML & compliance policies

✅   Integrated sanctions checks into your landlord and tenant onboarding process

✅   Implemented a reliable tool to automate and monitor results

✅   Trained your team on how to identify red flags and report to OFSI

✅   Set up a place to keep accurate records of checks and actions

For further information on this subject read the government's General Guidance to UK Sanctions.

What’s next?

Further changes are expected in Autumn 2025 under the Economic Crime and Corporate Transparency Act. Companies House will introduce mandatory identity verification for all company directors, persons with significant control (PSCs), and company formation agents.

This will apply before:

• Registering a new company

• Being appointed as a director or PSC

• Filing confirmation statements or updates

Verification will be done via Companies House One Login or through an Authorised Corporate Service Provider. Each verified person will receive a unique identifier required for future filings. These rules will also apply to overseas directors, LLP members and relevant legal entities, with no exemptions.

Identity verification is currently voluntary, but mandatory enforcement is expected from late 2025.

Note: A full article on this change will follow soon.

This article is intended as a guide only and does not constitute legal advice. If in doubt seek professional legal advice.

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