AML Rules and HMRC Guidance Have Changed: What Property Businesses Need to Know

Last updated: 24 July 2026

Property businesses have faced two important AML developments in quick succession. The Money Laundering and Terrorist Financing (Amendment) Regulations 2026, which amend the Money Laundering Regulations 2017, came into force on 30 June 2026. HMRC then published substantially revised AML guidance on 8 July 2026.

The changes do not replace the existing AML regime, but they affect how estate and letting agency businesses should assess risk, undertake due diligence, train staff and evidence their decisions.

What changed in the Money Laundering Regulations?

New £10,000 Letting Threshold

The previous threshold of €10,000 per month has been replaced by £10,000 per month. A letting is within scope where the agreement is for one month or more, and the rent is, or during at least part of the term will be, equivalent to £10,000 or more per month. HMRC also states that where rent starts below £10,000 but is realistically likely to exceed the threshold during the agreement, Customer Due Diligence (CDD) should be completed at the beginning of the relationship.

New Country-Based EDD Trigger

References to “high-risk third countries” have been replaced by “FATF Call for Action countries”. Mandatory Enhanced Due Diligence (EDD) applies where a relevant customer, beneficial owner or party to the transaction is established in a country on the FATF Call for Action list. This does not mean that every other overseas jurisdiction is low risk. Firms must still consider corruption, sanctions, transparency and other geographical risks.

Unusually Complex or Unusually Large Transactions

The EDD trigger has been reframed to cover a transaction that is: “Unusually complex or unusually large in each case given the nature of the transaction.” This reinforces the need to assess transactions in context rather than relying solely on fixed values. The rationale for treating a transaction as standard or high risk should be recorded.

Sterling Thresholds

Euro-denominated thresholds throughout the Regulations have generally been replaced with sterling amounts. Firms should check that policies, forms and system rules do not contain outdated euro references.

What does HMRC’s new guidance mean in practice?

CDD Should Start Earlier

For estate agency businesses:

• Seller identity verification should be completed before terms are agreed and before the property is marketed.
• HMRC recommends beginning buyer CDD as soon as possible after first contact and before an offer is accepted.
• Auctioneers must ensure buyer CDD is completed before a binding contract arises, either through bidder pre-registration or an effective condition precedent.

For regulated letting agency work:

• Landlord identity verification should be completed before terms are agreed and before advertising.
• Tenant, guarantor and other relevant party checks must be completed before the tenancy agreement is entered into.
• A deposit must not be accepted to secure a property before CDD has been satisfactorily completed.

Identifying the Correct Customers

Estate agents should identify all legal owners of the property, normally using Land Registry evidence, and undertake appropriate CDD on both the buyer and seller. Where somebody acts on behalf of a customer, the agent must verify that person, confirm their authority and still complete CDD on the underlying customer. HMRC has also provided more detail on probate, repossessions, shared ownership, joint agents, property sourcing businesses, relocation agents, franchises and self-employed agency models.

Risk Assessments Must Be Specific and Evidenced

Firm-wide risk assessments must reflect the individual business, including its customers, locations, services, delivery channels and operating model.

Where a risk indicator is present, but the firm decides that the overall case is not high risk, HMRC expects the justification to be recorded.

HMRC now identifies super-prime property as:

• £5 million or more in London and the South East; and
• £1 million or more elsewhere in the UK.

Other significant indicators include overseas corporate structures, trusts, secrecy jurisdictions, unexplained bridging finance, gifted funds, third-party payments and transactions that appear inconsistent with the customer’s known means.

Source of Funds and Wealth

Source of funds and wealth should be considered as part of the customer risk assessment and ongoing monitoring. HMRC states that verification is required when Enhanced Due Diligence is conducted. This is particularly relevant to Politically Exposed Persons (PEPs) and connections to FATF Call for Action countries. It is not enough simply to collect documents. Firms must understand what the evidence demonstrates: whether sufficient funds are available and whether the funding is consistent with the customer’s circumstances.

Simplified Due Diligence

Simplified Due Diligence (SDD) does not mean that no due diligence is required. It may only be applied where the overall relationship or transaction is genuinely low risk. A single factor, such as the customer being UK-based, professionally regulated or already known to the business, is not sufficient on its own. The decision must be risk-based and recorded.

Annual Training

HMRC now expressly expects relevant employees and agents to receive AML training at least annually, with more frequent training where appropriate. Training should also be refreshed following regulatory changes, emerging risks, changes in responsibilities, new technology or identified competency issues.

What should property businesses do now?

Firms should:

1. Review their firm-wide risk assessment against the new Regulations and HMRC guidance.
2. Update policies, CDD procedures and customer risk assessments where necessary.
3. Check that systems contain the correct £10,000 letting threshold and EDD country trigger.
4. Review when CDD begins and how deposits and auction bidders are handled.
5. Ensure source-of-funds and source-of-wealth decisions are properly evidenced.
6. Provide staff with an update and ensure annual training is scheduled.
7. Test a sample of files to confirm that procedures are followed in practice.
8. Existing AML documents are not automatically non-compliant. However, firms should be able to demonstrate that they have considered the changes and updated their framework where necessary.

Frequently Asked Questions

About the author

Stephen Williamson, MICA (AML Dip), Lead AML Consultant, FCS Compliance.

Stephen spent 17 years working in the banking industry, specialising in both property finance and managing fraud and anti-money laundering teams for a range of organisations, from tier 1 banks to electronic money institutions. Stephen also has first-hand experience of the London property market, having spent many years both working for and running a property development firm. He is a member of the International Compliance Association (ICA), holding a Diploma in Anti-Money Laundering.

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