Guidance Note: AML for Commercial Estate and Lettings Agency

This Guidance Note: Anti-Money Laundering (AML) for Commercial Estate and Lettings Agency is intended to assist firms 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) and terrorism financing. 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.

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 Regulations lettings agents are required to conduct sanctions checks where the monthly rents exceed 10,000 euros per month.  From 14 May 2025, this requirement is being extended to include all rental property with no monthly income threshold. Lettings agencies should undertake checks on landlords, tenants, and any guarantors. 

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

The Guidance Note summarises the key pieces of legislation and regulations relating to anti money laundering (AML) and provides practical direction on conducting client due diligence, identifying individuals and entities, reporting suspicious and maintaining ongoing compliance. 

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