Guidance Note: AML for Residential Estate and Lettings Agency

This Guidance Note: Anti-Money Laundering (AML) for Residential Estate and Lettings Agency is intended to assist Estate and Lettings Agencies in understanding and complying with the relevant AML laws and regulations. As an Estate or Lettings Agency, it is important to understand your legal responsibilities under anti-money laundering (AML) regulations. This includes identifying risks, carrying out checks, and reporting suspicious activity. 

Money Laundering and Terrorist Financing

Money refers to the process of concealing the origins of money obtained through criminal activity, making it appear legitimate. In the property sector this can include:

• Purchasing property with criminal funds, then letting or selling it to create the appearance of legitimate income;
• Using complex company structures and multiple bank accounts to conceal the true beneficial owner of the property; 
• Engaging in mortgage fraud;
• Ghost lettings;
• Avoiding tax by undervaluing the sale price or manipulating the price of furniture and fittings to stay below taxable thresholds. 

Terrorist financing occurs when a person or entity raises, uses, or possesses money or other property with the intention of supporting terrorist activity.

The Regulations

Estate and Lettings Agencies must comply with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 as amended by The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (collectively, ‘the Regulations’). 

Under the Regulations, an “Estate Agent” is defined as a firm or sole practitioner who, or whose employees, carry out estate agency work as defined in section 1 of the Estate Agents Act 1979. A “Letting Agent” is defined as a firm or sole practitioner who, or whose employees, carry out letting agency work. 

The Regulations require Estate and Lettings Agencies to take appropriate measures to prevent their services from being used for money laundering and terrorist financing. These obligations include:

• Implementing appropriate anti-money laundering (AML) policies and procedures;
• Conducting risk assessments;
• Carrying out customer due diligence; 
• Maintaining comprehensive records; and 
• Reporting any suspicious activity 

Financial Sanctions Checks for Lettings Agents

Financial sanctions are imposed by the United Nations or United Kingdom to restrict  access to certain financial services, markets, and economic resources for specific individuals or entities. Lettings Agencies are obliged to understand and comply with financial sanctions requirements. 

The Office of Financial Sanctions Implementation (OFSI), part of HM Treasury (the authority for the implementation of financial sanctions in the UK), maintains the official list of designated persons and issues guidance on sanctions compliance. 

Currently, under the AML Regulations Lettings Agents are required to conduct sanctions checks where the  monthly rents exceed 10,000 euros per month. However, from 14 May 2025, Lettings Agents will be classified as "relevant firms" under The Sanctions and Anti-Money Laundering Act 2018. 

What Does This Mean For Lettings Agents? 

In addition to ensuring compliance with AML regulations, Lettings Agents will be required to:

• Conduct sanctions checks on  all potential tenants, landlords and other relevant parties, regardless of rental value;
• Check these parties against government sanctions lists before entering into contracts and accepting payments; 
• Report to the OFSI if they know, or suspect that a party is a designated person or has breached sanctions regulations.  Reports are only required where the knowledge or suspicion arises in the course of conducting your business activities.

Failure to comply can result in significant financial penalties and imprisonment for up to seven years. 

Guidance 

This Guidance Note provides only a brief overview of the applicable anti-money laundering (AML) regulations and it not intended to constitute legal advice. It does not replace your responsibility to ensure you are adequately trained in AML compliance or to consult and adhere to the official guidance issued by HM Revenue and Customs (HMRC) and HM Treasury.

HMRC guidance on the Regulations can be accessed here.  

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