Sanctions checks are already a standard part of Anti-Money Laundering (AML) due diligence, but for the first time, these checks will now be 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.
Sanctions Check |
PEP Check |
|
🔹 Looks for individuals or organisations on official sanctions lists (like OFSI, UN, EU, OFAC) |
🔹 Identifies Politically Exposed Persons — people in high public positions, or their family/associates |
|
🔹 Focuses on legal restrictions and national security |
🔹 Focuses on risk of corruption, bribery or money laundering |
|
🔹 Required for letting agents from May 2025 |
🔹 Often included as part of broader AML/KYC checks |
|
🔹 Illegal to deal with sanctioned individuals |
🔹 Higher AML risk but not illegal to deal with |
|
🔹 Requires asset freezing and reporting |
🔹 Requires enhanced due diligence |
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 will agents be required to do?
From 14 May 2025, letting agents will be 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 will it 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’ll need to search names carefully and document your results.
What should agents do now?
Make sure your team is ready for the change:
✅ Review and update your AML & compliance policies
✅ Integrate sanctions checks into your landlord and tenant onboarding process
✅ Use a reliable tool to automate and monitor results
✅ Train your team on how to identify red flags and report to OFSI
✅ Keep accurate records of checks and actions
For further information on this subject read the government’s General Guidance to UK Sanctions.
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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