On 14 May 2025, the sanctions rules for the UK property sector changed in a way that caught a large part of the lettings market off guard. From that date, every letting agent in the country became subject to financial sanctions reporting obligations — not only those handling high-value tenancies, as before, but all of them, on every let, regardless of the rent. The threshold that had quietly excluded the vast majority of residential lettings was removed entirely.
The change matters more than its brief description suggests, because sanctions compliance is not like the rest of the anti-money laundering regime that agents are used to. It operates on strict liability, which means good intentions and reasonable effort are not a defence in the way they can be elsewhere. And the penalties are calibrated to the seriousness the government attaches to sanctions: failing to comply can attract a fine of the greater of £1 million or 50% of the value of the breach.
Yet nearly a year on, the same misunderstandings keep surfacing. Agents conflate sanctions screening with AML checks and assume the two work the same way — they do not. They misread who must be screened and when. They treat screening as a one-off at the start rather than an ongoing obligation. And they underestimate how a strict-liability regime changes what “trying your best” is worth.
This guide sets out precisely what changed on 14 May 2025, how the sanctions regime differs from the AML checks agents already know, exactly who must be screened and at what point, and the specific mistakes that turn a routine transaction into a reportable breach. It is written for letting and estate agency principals, branch managers, compliance leads and nominated officers, and it draws on OFSI guidance, HM Treasury, and the Regulations.
A note on who wrote this. This guide is published by OnBoardNow, which makes client onboarding software with built-in identity verification and sanctions, PEP and AML screening for regulated UK firms, including estate and letting agents. We have a commercial interest in this area and have stated it. The guidance below is drawn from OFSI and the legislation, not from our product; where technology is relevant we say so and label it. Read every vendor-published guide with that interest in mind, this one included.
What Actually Changed on 14 May 2025
To understand the change, it helps to know what came before it. Financial sanctions have applied to UK estate agents for a long time — well before the 2022 invasion of Ukraine sharpened the focus on them — because estate agency work has long been treated as a route through which sanctioned money could move into property. Letting agents, however, sat largely outside the reporting obligations unless they were handling genuinely high-value work.
The dividing line was a threshold. Previously, letting agents were drawn into the relevant obligations only where they managed property with a monthly rent equivalent to €10,000 or more — around £8,300 a month, which in practice meant only high-end residential and some commercial property. The overwhelming majority of ordinary residential lettings fell below it and were, for these purposes, out of scope.
On 14 May 2025 that threshold was removed for sanctions purposes. Letting agents were formally added to the list of “relevant firms” under the financial sanctions regulations, and the reporting obligation now applies to all letting agency work regardless of the rental value. A standard residential tenancy at ordinary market rent now carries the same sanctions reporting obligation as a super-prime London let. OFSI, the Office of Financial Sanctions Implementation — the division of HM Treasury that administers and enforces financial sanctions — published dedicated guidance for letting agents to accompany the change.
The government’s stated rationale was closing a loophole. A threshold that exempted lower-value lettings created a gap that could, in principle, be exploited: a sanctioned person unable to buy property or take a high-value let might still secure an ordinary tenancy unnoticed. Removing the threshold closes that gap and brings letting agents into line with the obligations estate agents already carried.
The Critical Distinction: Sanctions Screening Is Not AML
The single most consequential mistake agents make is treating sanctions screening as though it were part of the AML regime they already know. The two overlap in practice and are often run together, but they are separate legal regimes with different rules, different thresholds, different supervisors, and — most importantly — a fundamentally different standard of liability. Getting this wrong leads agents to apply AML assumptions to a regime where those assumptions do not hold.
| Dimension | AML checks | Sanctions screening |
|---|---|---|
| Governing regime | Money Laundering Regulations 2017 | Financial sanctions regulations (OFSI / HM Treasury) |
| Threshold for letting agents | €10,000/month rent still applies for AML registration | No threshold — applies to every let since 14 May 2025 |
| Standard of liability | Risk-based; adequate procedures can be a defence | Strict liability — no ‘we did our best’ defence |
| Who you report to | National Crime Agency (SAR) | OFSI (financial sanctions report) |
| What triggers action | Suspicion of money laundering | Match, or reasonable suspicion of a match, to the sanctions list |
| Core question | Is this money’s origin legitimate? | Is this person on the sanctions list? |
Two rows in that table deserve particular emphasis, because they are where the misunderstandings concentrate.
First, the threshold difference. The €10,000 monthly rent threshold still exists for AML purposes — a letting agent that only handles property below it is not required to register with HMRC for money-laundering supervision. But that threshold does not apply to sanctions. A letting agent handling only ordinary-rent tenancies, entirely outside the AML registration requirement, is nonetheless fully subject to sanctions screening and reporting on every one of those tenancies. An agent who reasons “we’re below the AML threshold, so we’re out of scope” has made a serious error: they may be out of scope for AML registration and squarely in scope for sanctions.
Second, the liability difference, which is the heart of why sanctions compliance is more demanding than it first appears — and it warrants its own section.
Why Strict Liability Changes Everything
Under the AML regime, an agent who took reasonable steps and maintained adequate procedures has, in many circumstances, a meaningful defence if something is missed. The regime is risk-based: it asks whether the agent’s procedures were proportionate and properly applied, and a genuine, well-run compliance effort counts in the agent’s favour.
Financial sanctions do not work that way. Dealing with a designated person — someone on the sanctions list — is a breach regardless of whether the agent knew, suspected, or took every reasonable step to check. OFSI does not, as a matter of the underlying prohibition, accept ignorance or negligence as a defence for the breach itself. If a sanctioned individual enters into a tenancy the agent facilitated, the breach has occurred; the agent’s good intentions do not undo it.
This is what “strict liability” means, and its practical implications are significant. It means that occasional or judgment-based screening is not enough, because the regime does not reward effort — it penalises the outcome. It means screening cannot be reserved for clients who seem suspicious, because the obligation attaches to everyone, and a plausible, unremarkable applicant is exactly how a sanctioned person would present. And it means the screening must be systematic and complete, applied to every relevant party on every transaction, because a single unscreened party is a single point at which a breach can occur undetected.
There is a further consequence that agents frequently overlook: an agent must not deal with, or handle funds for, a designated person, and must not make funds or economic resources available to them. This goes beyond reporting. Even setting aside the reporting obligation, the agent cannot proceed with the transaction or handle the money. Screening is therefore not merely about knowing whether to file a report; it is about knowing whether the agent is legally permitted to act at all.
The penalties reflect the seriousness. Failure to comply can result in a fine of the greater of £1 million or 50% of the value of the breach. To illustrate the scale OFSI operates at, a London-based company was fined £1.4 million in a case involving failures around risk assessment, AML controls and due diligence. These are not the sums associated with a minor administrative lapse; they are calibrated to a regime the government treats as a matter of national security and foreign policy.
Who Must Be Screened, and Exactly When
A great deal of the confusion about the new rules concerns who must be screened and at what point the obligation bites. The timing is more precise than many agents assume, and it differs between landlords and tenants — a distinction that OFSI’s guidance draws deliberately and that agents frequently miss.
| Party | When the reporting obligation is triggered | What the agent must do |
|---|---|---|
| Prospective landlord | From the point the landlord instructs the agent | Screen at instruction; report to OFSI if a match or reasonable suspicion arises |
| Prospective tenant | Once the landlord has accepted the tenant’s offer (parties are agreeing terms) | Screen at that point; report if a match or reasonable suspicion arises |
| Both parties generally | On an ongoing basis as the sanctions list changes | Re-screen; the list is updated and a clear party can later become designated |
The landlord/tenant timing difference is worth stating plainly because it is so often misunderstood. For a prospective landlord, the reporting obligation applies from the moment they instruct the agent — the relationship begins, and the obligation begins with it. For a prospective tenant, the obligation is triggered later, once the landlord has formally accepted the tenant’s offer and the parties are in the stage of agreeing the tenancy. Screening the tenant is not a formality to be done at the very end; it needs to happen at the point the offer is accepted, before the tenancy completes, so that a match can stop the transaction rather than merely be reported after it has gone through.
“Letting agency work” itself is defined broadly: it covers work done in response to instructions from a prospective landlord seeking a tenant, or a prospective tenant seeking a property to rent, for a term of a month or more. Some activities fall outside the definition, and agents should check the precise scope against OFSI’s guidance, but the core residential letting business is squarely within it.
One area where OFSI’s guidance has been criticised as less than fully clear concerns the edges: whether agents must monitor clients on a continuing basis throughout a tenancy, and whether guarantors should be screened. The guidance and its FAQs leave some of this open. What is clear is the direction of the obligation — agents are expected to take reasonable steps to understand their sanctions exposure and to know who they are dealing with — so the prudent course, pending clearer guidance, is to screen the parties the agent has a relationship with and to re-screen as the list changes, rather than to read the ambiguity as permission to do less.
What Agents Still Get Wrong
Nearly a year into the new regime, a consistent set of mistakes recurs. Each stems from applying an old assumption to a regime that no longer works that way.
Assuming the AML threshold exempts them. This is the most common and most dangerous error. The €10,000 monthly rent threshold that governs AML registration does not apply to sanctions. An agent handling only ordinary-rent lettings, correctly unregistered for AML supervision, is still fully subject to sanctions screening on every let. “We’re below the threshold” is true for AML and false for sanctions, and conflating the two leaves the agent exposed on every transaction.
Screening only clients who seem suspicious. Under a risk-based regime, focusing scrutiny on higher-risk clients is sensible. Under strict-liability sanctions, it is a mistake. The obligation attaches to everyone, and a sanctioned person attempting to evade detection will present as unremarkable. Screening only those who raise a flag guarantees that the ones who do not raise a flag go unscreened — which is precisely the gap the regime exists to close.
Treating screening as a one-off. An agent who screens a party once, at the start, and never again has misunderstood the obligation. The sanctions list changes: individuals and entities are added as designations are made. A party who was entirely clear when first screened can become a designated person during a tenancy. The obligation is ongoing, and reliance on a single historic check is reliance on information that may now be out of date.
Confusing the two report destinations. AML suspicions go to the National Crime Agency as a SAR. Sanctions matches or suspicions go to OFSI. They are different bodies with different forms and different obligations, and an agent who files the wrong report to the wrong place has not discharged the correct obligation. Both regimes may apply to the same transaction, and both reports may be required.
Missing the tenant screening timing. Because the tenant obligation is triggered later than the landlord’s — at offer acceptance rather than instruction — some agents defer tenant screening too far, effectively to completion. Screening the tenant only once the tenancy is already in place defeats the purpose: the point is to catch a match before the transaction completes, so that the agent does not deal with or handle funds for a designated person.
Believing effort is a defence. Perhaps the most fundamental error is importing the AML mindset that a good-faith, well-documented effort protects you. In sanctions, the breach is the outcome of dealing with a designated person, and effort does not undo it. This does not mean effort is pointless — robust, systematic screening is exactly how an agent avoids the breach in the first place — but it means the agent cannot rely on “we tried” if a designated person slips through a partial process.
Running screening manually across volume. The consolidated UK sanctions list runs to thousands of individuals and entities and is updated regularly. Screening every landlord and every tenant against a list of that size, at the right point in each transaction, and re-screening as the list changes, is not a task a busy branch performs reliably by hand. Manual screening is where the misses happen — not through negligence, but through the sheer impracticality of doing it consistently at volume.
What Good Sanctions Compliance Looks Like
Set against those mistakes, the shape of reliable compliance becomes clear. It rests on a few principles, each of which directly answers one of the common failures.
Screen everyone, not just the suspicious. Because the obligation attaches to every party and a sanctioned person will not announce themselves, screening must be universal — every landlord at instruction, every tenant at offer acceptance. Universality is not over-caution; it is the minimum the regime requires.
Screen at the right point, and screen again. Timing matters: landlords at instruction, tenants at offer acceptance, and both re-screened as the sanctions list is updated. Building the screening into the transaction workflow at the correct stages, rather than as an afterthought, is what makes it reliable.
Keep the evidence. Although sanctions liability is strict, being able to demonstrate a systematic, properly-timed screening process matters — both for the agent’s own risk management and for demonstrating good faith to OFSI in any engagement. A screening that happened but cannot be evidenced is, for practical purposes, hard to rely on.
Do not proceed on a match. Screening is not only about reporting. If a party is a designated person, the agent must not deal with them or handle their funds. The process must therefore stop the transaction on a match, not merely generate a report while the let proceeds.
Automate what cannot be done reliably by hand. Given the size of the sanctions list, the frequency of updates, and the requirement to screen every party at the right moment and re-screen over time, systematic automated screening is close to essential for an agency handling any volume. This is the clearest case in property compliance where automation is not a convenience but a practical necessity for meeting a strict-liability obligation reliably.
This last point is where digital onboarding and screening tools earn their place. A well-designed process screens every party against the current sanctions list at the correct transaction stage, re-screens automatically as the list changes, stops the transaction on a match rather than letting it proceed, and keeps the timestamped record that demonstrates the process ran. The alternative — a member of staff manually checking names against a list of thousands, at the right moment, on every let, and remembering to do it again as the list updates — is precisely the process that fails under volume and pressure. The point is not that software is legally required; it is that a strict-liability obligation applied to every transaction is exactly the kind of obligation that manual processes miss and systematic ones catch.
Frequently Asked Questions
What changed for letting agents on 14 May 2025?
From 14 May 2025, letting agents became “relevant firms” under the UK financial sanctions regulations and subject to sanctions reporting obligations on all letting agency work, regardless of rent. Previously, only lettings above a monthly rent equivalent to €10,000 (around £8,300) attracted these obligations; that threshold was removed for sanctions purposes. Letting agents must now screen landlords and tenants against the UK sanctions list and report matches or reasonable suspicions to OFSI, the Office of Financial Sanctions Implementation, on every let.
Do letting agents have to do sanctions checks on every tenancy?
Yes. Since 14 May 2025 there is no monetary threshold for sanctions purposes, so the obligation applies to all letting agency work regardless of the rental value — an ordinary residential tenancy carries the same sanctions screening and reporting obligation as a high-value one. This is different from AML registration, which still uses the €10,000 monthly rent threshold. An agent can be below the AML threshold and correctly unregistered for money-laundering supervision, yet still fully subject to sanctions screening on every tenancy.
What is the difference between sanctions screening and AML checks?
They are separate regimes. AML checks, under the Money Laundering Regulations 2017, are risk-based and concerned with whether money’s origin is legitimate; suspicions are reported to the National Crime Agency, and adequate procedures can form a defence. Sanctions screening checks whether a person is on the UK sanctions list; it operates on strict liability, meaning dealing with a designated person is a breach regardless of effort, and matches or suspicions are reported to OFSI. The AML €10,000 rent threshold does not apply to sanctions, which have no threshold. Both regimes can apply to the same transaction, and both reports may be required.
Who do letting agents report sanctions concerns to?
Letting agents report financial sanctions matches or reasonable suspicions to OFSI — the Office of Financial Sanctions Implementation, part of HM Treasury — using OFSI’s reporting process, including the identifying information they hold about the designated person and details of any funds or economic resources held. This is distinct from anti-money laundering suspicions, which are reported to the National Crime Agency as a suspicious activity report. The two go to different bodies, and an agent should be clear which regime a given concern falls under.
When must a letting agent screen a tenant?
The reporting obligation in relation to a prospective tenant is triggered once the landlord has formally accepted the tenant’s offer and the parties are agreeing the tenancy — not at the very end of the process. Screening should therefore happen at that point, before the tenancy completes, so that a match can stop the transaction rather than merely be reported afterwards. This differs from the landlord obligation, which applies from the moment the landlord instructs the agent. Getting these two timings right is one of the most common points agents miss.
What are the penalties for a sanctions breach?
Failure to comply with financial sanctions obligations can result in a monetary penalty of the greater of £1 million or 50% of the value of the breach, alongside potential prosecution. Because the regime operates on strict liability, dealing with a designated person is a breach regardless of whether the agent knew or took reasonable steps. To indicate the scale OFSI operates at, a London-based company was fined £1.4 million in a case involving failures around risk assessment, AML controls and due diligence. These penalties reflect that sanctions are treated as a national security and foreign policy matter, not a routine administrative requirement.
Do estate agents have the same sanctions obligations as letting agents?
Estate agents have been subject to financial sanctions obligations for considerably longer than letting agents — the 14 May 2025 change brought letting agents into line with estate agents, not the other way round. Both must now screen the parties to their transactions against the UK sanctions list and report matches or reasonable suspicions to OFSI, on a strict-liability basis and without a monetary threshold. The core obligation is the same; the practical details of timing and which parties are screened follow the nature of the transaction (sale versus let), but the underlying strict-liability screening-and-reporting duty applies to both.
The 14 May 2025 change was, on its face, simple: a threshold removed, letting agents added to the list of relevant firms. Its practical weight comes from what sits underneath — a strict-liability regime, applied now to every let, with penalties measured in millions and no defence of good intentions for the breach itself. That combination is what makes the mistakes agents keep making so costly.
The mistakes are consistent and avoidable. Do not assume the AML threshold exempts you from sanctions — it does not. Do not screen only the suspicious — the obligation attaches to everyone, and the sanctioned present as ordinary. Do not treat screening as a one-off — the list changes and a clear party can later be designated. Get the timing right — landlords at instruction, tenants at offer acceptance. Report to the right body — OFSI for sanctions, the NCA for money laundering. And do not rely on effort as a defence — in sanctions, the outcome is what counts.
Underlying every one of those corrections is the same practical truth: a strict-liability obligation applied to every transaction, against a list of thousands that changes regularly, is not something a busy agency screens reliably by hand. The agents who get this right build screening into their process so that it happens automatically, at the right point, for every party, every time, and re-runs as the list updates — turning a regime that punishes the outcome into one they can actually satisfy. In a world of strict liability, the only reliable defence is not trying harder; it is a process that does not miss.
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