Anti-Money Laundering (High Value Lettings)

This range of professionally drafted template policies and documents are designed for use by residential Lettings Agents to support compliance with Anti-Money Laundering (AML) legislation and regulations. Breaches of AML regulations can result in unlimited fines, and in some cases, criminal prosecution so it is important for lettings agencies have appropriate policies and documents in place.

Important Notice: From 14 May 2025, Lettings Agents will be classified as ‘relevant firms’ under the Sanctions and Anti-Money Laundering Act 2018, significantly expanding their compliance obligations. This suite of updated documents has been revised to reflect these important regulatory changes and support ongoing compliance as well as new documents to assist in understanding AML regulations.

Money Laundering and Terrorist Financing

Money Laundering 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

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”) define “Letting agent” as a firm or sole practitioner who, or whose employees, carry out letting agency work. “letting agency work” means work:

(a) consisting of things done in response to instructions received from:

(i) a prospective landlord seeking to find another person to whom to let land/property, or

(ii) a person prospective tenant seeking to find land/property to rent, and

(b) where an agreement is concluded for the letting of land/property:

(i) for a term of a month or more, and

(ii) 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.

As a Letting Agent, if you fall within the above definition, you will need to be registered with HM Revenue & Customs. 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.

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 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 current AML Regulations, Lettings Agents are required to carry out sanctions checks only 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 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

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

Below is a list of the template policies and document available to assist you with AML compliance.

Important Notice:

The AML templates are an EXAMPLE 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.

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