Mandatory AML Checks for Letting Agents: Are You Ready?

From 14 May 2025, in line with new regulations, letting agents must carry out Anti Money Laundering (AML) checks on all prospective tenants, guarantors and landlords and report any PEPS or Sanctions they may find to the OFSI (office of Financial Sanctions Implementation), regardless of the level of monthly rent.

This is a part of the UK government's efforts to strengthen compliance with financial sanctions and anti-money laundering (AML) laws. From this date onwards, Agents will need to verify the identity of tenants and landlords and check that they don’t appear on the UK’s financial sanctions list.

A suitable check should typically include:

• Identity Check
• PEP Search, (A check against a list of politically exposed persons)
• A check against the UK sanctions list which contains all designated person sunder sanctions regimes implemented in the UK (UK Sanctions Search)
• An SDN Check, A check against the Specially Designated Nationals and Blocked Persons list and all other sanctions lists administered by the Office of Foreign Assets Control (OFAC)

Should any potential PEPS or sanctions be found against their tenants, guarantors or landlords or have any evidence or suspicions that a client has breached financial sanctions then they must report this to the OFSI.

Failing to do say may result in a heavy fine with penalties ranging between ranging from £1,500 to over £50,000.

In today's regulatory landscape, Anti-Money Laundering (AML) checks are crucial for agents to ensure compliance and mitigate risks. Other organisations governed by the same regulations may also need to conduct such checks and these include, Accountants and Tax Advisers, Estate Agents, Legal Professionals, Trust and Company Service Providers, Gaming and Casino Businesses, Luxury Goods and Art Dealers and Money Service Businesses. Anti-money laundering checks should be carried out at least once a year, but the frequency depends on the risk and the regulations in the industry.

Consequences for Letting Agents Who Fail to Conduct AML Checks

Non-compliance with AML regulations carries serious repercussions for letting agents:

1. Substantial Financial Penalties: Fines for failing to conduct proper AML checks range from £1,500 for minor violations to over £50,000 for serious or repeat offenses. These penalties apply regardless of whether money laundering actually occurred.
2. Criminal Prosecution: In severe cases, letting agents who knowingly or negligently fail to implement proper AML procedures may face criminal charges, potentially resulting in imprisonment for the responsible individuals.
3. Regulatory Sanctions: Professional bodies may impose additional sanctions, including temporary or permanent revocation of licenses and professional credentials.
4. Civil Liability: Letting agents may face civil lawsuits from parties who suffer losses due to their failure to conduct proper due diligence.
5. Reputational Damage: Being associated with money laundering or regulatory non-compliance can cause irreparable harm to an agency's reputation, leading to loss of clients and business partners.

Understanding AML Checks

AML checks are identity verification processes used to establish whether an individual is involved in money laundering activities. These checks are a legal requirement for agents to undertake on customers as part of their anti-money laundering compliance efforts.

AML checks often overlap with Know Your Customer (KYC) verification processes. This part of the verification process is known as Know Your Customer (KYC).

LetHQ's AML checks provide a comprehensive and efficient solution for agents to ensure compliance and mitigate risks associated with money laundering. Powered by an industry, leading provider and leveraging the latest technology, LetHQ helps businesses streamline their operations and build trust with their customers and remain compliant.

For more information on LetHQ's AML checks and how they can protect you and your business, visit: https://lethq.co.uk/service/aml-anti-money-laundering-checks

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