Anti-Money Laundering Compliance

This collection of professionally drafted policies and templates is designed to help residential lettings agents comply with Anti-Money Laundering (AML) regulations and financial sanctions requirements.

Robust AML procedures are essential. Breaches can result in unlimited fines, regulatory enforcement, and potential criminal liability.

What Is Money Laundering In Property?

Money Laundering involves disguising criminal funds, 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 is another criminal offence which occurs when a person or entity raises, uses, or possesses money or other property with the intention of supporting terrorist activity.

Anti Money Laundering (AML) Regulations

Letting agents 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 and The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 (collectively, “the Regulations”). These Regulations apply where letting agency work is carried out - that is work consisting of things done in response to instructions received from:

a prospective landlord seeking to find another person to whom to let land/property, or
a person prospective tenant seeking to find land/property to rent, and
where an agreement is concluded for the letting of land/property:
for a term of a month or more, and
at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 Euros or more.

Letting agents meeting this criteria must register with HM Revenue & Customs (HMRC) and comply with AML supervision requirements.

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

A failure to comply with the Regulations will result in a civil penalty or even criminal prosecution. Senior managers and nominated officers can also be found personally liable for a breach of the Regulations.

Sanctions and Anti-Money Laundering Act 2018

Lettings agents are classified as ‘relevant firms’ (since May 2025) under the Sanctions and Anti-Money Laundering Act 2018. This imposes compliance obligations which include making mandatory sanctions checks on all landlords and tenants, regardless of rental value.

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 required 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.

Under the AML Regulations, Lettings Agents are required to carry out sanctions checks regardless of the amount of monthly rent payable under any lettings agreements. (Since 14 May 2025, Lettings Agents are 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 must:

Conduct sanctions checks on all 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.

Government Guidance

HMRC has produced specific guidance for both Estate and Letting Agents concerning money laundering supervision. This should be consulted regularly and is available at: Estate and letting agency business guidance for money laundering supervision - GOV.UK (www.gov.uk). The OFSI has also published guidance for lettings agents and landlords: UK financial sanctions general guidance - GOV.UK

Documents available

Browse from the list of the templates below:

Important Notice:

The AML templates are EXAMPLES ONLY and are intended as a starting point. You must tailor them to reflect your business’s size, structure, and risk profile. You should always refer to the relevant anti-money laundering regulations and specific HMRC guidance. If you are unsure how to edit or adapt these templates, you must seek professional legal advice.

Anti-Money Laundering Compliance is part of Property. Just £38.50 + VAT provides unlimited downloads from Property for 1 year.

Frequently Asked Questions

As a letting agent, when do I actually have to register with HMRC for money laundering supervision? +

You must register with HMRC and run full anti money laundering checks where you carry out letting agency work for a tenancy of a month or more at rent equivalent to 10,000 euros a month or more. Below that threshold your lettings work is outside HMRC supervision, though estate agency sales work is always in scope. Failing to register when required can bring a penalty and, in serious cases, prosecution. The firm wide risk assessment and AML policy templates start you off.

I only handle ordinary rentals well under 10,000 euros a month. Do sanctions rules still apply to me? +

Yes. Since 14 May 2025 all letting agents are relevant firms for financial sanctions, whatever the rent. You must screen landlords and tenants against the UK sanctions list and report to the Office of Financial Sanctions Implementation if you know or have reasonable cause to suspect someone is a designated person or has breached sanctions. This duty is separate from HMRC anti money laundering registration. The sanctions checklist and policy cover it.

What is customer due diligence and who do I have to check? +

Customer due diligence means identifying and verifying your client and any beneficial owner before you act, and understanding the purpose of the arrangement. For in scope lettings and for sales you check both sides, landlord and tenant or buyer and seller. Higher risk cases need enhanced checks. Keep the records for five years. The customer due diligence and client identification templates structure the process.

What happens if I get money laundering compliance wrong? +

Breaches can bring an unlimited fine and, in serious cases, criminal prosecution. Senior managers or the nominated officer can also be personally liable. HMRC has fined agents heavily, often just for late registration. A tailored risk assessment, written policies and staff training are your defence. These templates are a starting point you must adapt to your business, not an off the shelf guarantee of compliance.

Do I report a money laundering suspicion to HMRC? +

No. Suspicions of money laundering go to the National Crime Agency as a suspicious activity report, not to HMRC, which is your supervisor for registration and inspection. Suspected sanctions breaches go to OFSI. Tipping off the client that a report has been made can itself be an offence. The guidance note and reporting templates explain the routes.

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