From 14th May 2025, UK letting agents will be legally required to report breaches or suspected breaches of financial sanctions regulations to HM Treasury’s Office of Financial Sanctions Implementation (OFSI).
What are financial sanctions?
Financial sanctions help the UK meet its foreign policy and national security aims. Financial sanctions include restrictions on designated persons, such as freezing financial assets and restrictions on investment and financial services.
Key Points
Who is affected
- Firms or sole practitioners carrying out ‘letting agency work’
- The obligations apply regardless of rent levels (unlike Anti-Money Laundering rules which apply only to high-value properties)
What is a designated person?
- A person or entity subject to financial sanctions, such as asset freezing.
- Destinated persons are named on the consolidated list which can be access and checked here
When do obligations apply?
- Landlords/ Prospective Landlords: From the moment an agent is instructed.
- Tenants/ Prospective Tenants: From the point the tenant’s offer is accepted by the landlord and parties are in the course of concluding an agreement
What are the Reporting duties?
Agents must make a report to OFSI as soon as practicable if they:
- Know or suspect someone is a designated person or
- Know or suspect a breach of financial sanctions has occurred.
What should the report contain?
- Basis for the knowledge/suspicion
- Identifying information of the person involved
- If the person is a client, details of any funds or economic resources held for them.
- Guidance on making a report can be found here
Are there any exemptions?
- Knowledge or information gained in a personal capacity and not in the course of the letting agent carrying on its business, does not trigger the reporting obligation
- Certain activities, such as publishing adverts, are excluded. So a newsagent displaying a ‘to let’ notice would be exempt.
- Leases or agreements with a term of less than one month.
Ongoing Obligations
- The duty to report does not end after initial instruction, so agents should continue monitoring throughout the tenancy and report if knowledge or suspicions arise later.
What Action is required now?
In advance of the Regulations coming into force, letting agents should:
- Review Government guidance which is accessible here
- Consider arranging staff training to ensure everyone is aware of their obligations
- Review landlord onboarding and tenant screening processes to incorporate steps to comply with the regulations
If you are a letting agent impacted by the changes and require advice, our expert Private Rented Sector are on hand to assist. Contact us here.
