- February 6, 2025
- Posted by: FCS Compliance
- Category: News, Property Market
From 14 May 2025, new financial sanctions regulations will take effect, placing stricter obligations on letting agents. These changes mean that letting agents must ensure that neither tenants nor landlords appear on government sanctions lists, or face severe penalties including substantial fines and imprisonment for up to seven years.
What Are Your New Obligations?
Mandatory Screening of All Parties
Letting agents must screen all potential tenants, landlords, and other relevant parties against financial sanctions lists before entering into contracts or accepting payments—regardless of the rental value. These checks should be conducted regularly, as sanctions lists are frequently updated.
Enhanced Due Diligence Requirements
To comply with the new regulations, letting agents must:
- Verify the identity of all parties involved by confirming names, addresses, and other personal details.
- Take appropriate action if a match is found on a sanctions list.
- Maintain detailed records of all checks, including the date of the check and its outcome.
Obligation to Report to the Office of Financial Sanctions Implementation (OFSI)
Letting agencies must report to OFSI immediately if they know or reasonably suspect that a person is designated under financial sanctions, has breached a prohibition, or failed to comply with an obligation under sanctions regulations.
What Happens If You Don’t Comply?
Non-compliance with financial sanctions can result in:
- Substantial fines imposed on your business.
- Up to seven years imprisonment for serious breaches.
- Reputational damage and regulatory scrutiny.
How to Stay Compliant Before the Deadline
With the May 2025 deadline fast approaching, letting agents must act now:
- Check the OFSI Online Search Facility – Regularly review government databases to verify parties involved in transactions.
- Provide Staff Training – Ensure all employees are up to date on the new regulations and best practices for compliance.
- Implement Robust Compliance Procedures – Establish a system for consistent screening, record-keeping, and reporting.
Webinar: Latest HMRC Fines & New Financial Sanctions Obligations for Lettings
Malcolm Driscoll will be discussing what these new laws mean for agents at 10am on Tuesday 4 March on the Rightmove Hub. Registration for this webinar is free for Rightmove members and places can be secured here: https://hub.rightmove.co.uk/webinar/aml-update/
Final Thoughts
These changes introduce stricter obligations for letting agents, making financial sanctions compliance non-negotiable. By taking proactive steps now, you can protect your business, avoid penalties, and contribute to the fight against financial crime. Don’t wait—ensure your compliance framework is fully in place before 14 May 2025. If you need support with these changes contact us here.
