Anti-Money Laundering
AML Glossary
A plain-English guide to the anti-money laundering terms that matter in the UK property market. From customer due diligence and SARs to OFSI, FATF and HMRC inspections, every entry is defined clearly and kept current.
General AML
48 termsCriminal Property
Property that constitutes or represents a person's benefit from criminal conduct, where the person knows or suspects this. Property is defined broadly and can include money, land, vehicles, shares, jewellery and other assets. The concept is central to the POCA offences and does not depend on the size or type of the underlying crime.
Customer Due Diligence
The core checks a regulated business carries out to identify and verify a customer, understand the nature of the relationship and, where relevant, identify beneficial owners. CDD must be applied before establishing a business relationship or carrying out a relevant transaction.
In a property or art transaction this typically means verifying the client's identity, understanding who you are really dealing with, and checking the money makes sense, for example confirming a buyer's funds come from a declared house sale. FCS offers CDD on a pay as you go basis or fully outsourced.
Defence Against Money Laundering
A specific type of SAR that requests a defence against money laundering from the NCA. It is used where the reporter suspects that activity they intend to carry out involves criminal property, so that proceeding without a defence would itself be a money laundering offence. You have a defence if the NCA grants one, or if the notice period of seven working days expires without a response. A DAML is not approval, permission or clearance to act, and it is not a substitute for CDD.
Designated Person
An individual, entity or body named on a UK sanctions list as subject to financial sanctions such as an asset freeze. Dealing with a designated person, or making funds available to them, can be a criminal offence.
Economic Crime and Corporate Transparency Act 2023
Legislation that became law in October 2023, overhauling Companies House, increasing corporate transparency and introducing a new failure to prevent fraud offence and a revised senior manager test for corporate criminal liability.
Economic Crime Levy
An annual charge on anti-money laundering regulated businesses with UK revenue above 10.2 million pounds, collected by HMRC, the FCA and the Gambling Commission to help fund the fight against economic crime. Smaller firms are exempt.
Enhanced Due Diligence
Additional, deeper checks applied in higher-risk situations. The mandatory triggers include a politically exposed person, a transaction that is unusually complex or unusually large given its nature, and a link to a country on the FATF Call for Action list. Since 30 June 2026 the geographic trigger is limited to that list, currently Iran, North Korea and Myanmar, rather than every high-risk third country. EDD typically includes establishing source of funds and source of wealth, satisfying yourself that the business relationship is understood and consistent with its stated purpose, and conducting enhanced ongoing monitoring. Where EDD is not applied the reasoning should be documented.
For instance, a sale involving an offshore company or a politically exposed person calls for EDD, which usually means establishing source of wealth and asking more about the transaction. FCS helps firms decide when EDD is required and what evidence to gather.
Failure to Disclose
An offence committed by a person in the regulated sector who knows or suspects, or has reasonable grounds to know or suspect, that another person is engaged in money laundering and does not report it to their nominated officer or the NCA.
FATF Recommendations
The set of international standards issued by the FATF that countries are expected to implement to counter money laundering, terrorist financing and proliferation financing. UK law is built to be consistent with them.
Financial Action Task Force
The intergovernmental body, established by the G7 in 1989, that sets the global standards for combating money laundering and terrorist financing. Its 40 Recommendations are adopted into law by countries worldwide, and it publishes lists of higher-risk jurisdictions.
Financial Sanctions
Restrictions imposed to achieve a foreign policy or national security goal, for example freezing the assets of a designated person and prohibiting funds or economic resources from being made available to them. They apply to everyone in the UK, not only regulated businesses.
For example, you must not complete a sale for, or make funds available to, a person on the UK sanctions list. Screening every party against the list is essential, and applies to lettings of any value.
Firm-Wide Risk Assessment
A written assessment a regulated business must carry out and keep up to date, identifying and evaluating the money laundering, terrorist financing and proliferation financing risks it faces, taking account of its customers, products, transactions, delivery channels and geography.
Grey List
FATF's list of countries with strategic weaknesses in their anti-money laundering controls that are actively working with FATF to fix them. The list is reviewed three times a year. Since 30 June 2026 a grey list connection is no longer an automatic enhanced due diligence trigger in the UK, but it remains a risk factor that should prompt closer scrutiny.
High-Risk Third Country
A country identified as presenting a high risk of money laundering or terrorist financing. Since 30 June 2026 only countries on the FATF Call for Action list, currently Iran, North Korea and Myanmar, automatically require enhanced due diligence in the UK. A link to any other higher-risk jurisdiction, including the FATF grey list, is a risk factor to weigh under the risk-based approach rather than an automatic trigger.
His Majesty's Revenue and Customs
The UK tax authority and the anti-money laundering supervisor for several sectors, including estate and letting agency businesses and art market participants. HMRC registers regulated businesses, inspects them and can impose penalties for non-compliance.
HMRC Inspection
A review by HMRC of a supervised business's anti-money laundering compliance. Inspectors typically check registration, the risk assessment, policies, controls and procedures, due diligence records, training and reporting, and will interview the individuals with senior compliance responsibilities. Failings can lead to penalties.
HMRC may visit or request documents, and weak paperwork can lead to a penalty. FCS offers mock inspections and inspection support so firms know what to expect and can put things right first.
Joint Money Laundering Steering Group
An industry body that produces detailed guidance on how to meet anti-money laundering obligations. While aimed mainly at the financial sector, its guidance is widely referenced as good practice.
Know Your Customer
The process of identifying and verifying who a customer is. KYC is the identity element within the broader requirement of customer due diligence, which also considers the purpose and risk of the relationship.
KYC answers who the client is, while CDD goes further into the purpose and risk of the relationship. For example, identifying a gallery's new buyer is KYC; assessing why they are paying through a third country is CDD.
Money Laundering
The process of disguising the origins of money obtained through crime so that it appears to come from a legitimate source. It is commonly described in three stages: placement, layering and integration.
Money Laundering Regulations 2017
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The principal UK rulebook setting out what regulated businesses must do, including registration, risk assessment, policies, customer due diligence and record keeping. The Regulations have since been amended, including in 2019, 2022 and 2026.
These Regulations are what HMRC inspects against. FCS Compliance audits firms against them and provides the risk assessment, policies and procedures they require.
Money Laundering Reporting Officer
The senior individual responsible for a firm's anti-money laundering compliance and for overseeing the reporting of suspicious activity. The role carries personal responsibility and, in some cases, personal liability.
In a small agency or gallery the MLRO is often a director carrying this on top of another role. FCS provides MLRO support and acts as a sounding board on difficult reporting decisions.
National Crime Agency
The UK law enforcement agency that leads the response to serious and organised crime. It receives suspicious activity reports through the UK Financial Intelligence Unit and decides on consent requests made through DAMLs.
National Risk Assessment
The UK government's periodic assessment of the money laundering and terrorist financing risks facing the country. It helps supervisors and regulated businesses understand where the greatest threats lie.
Nominated Officer
The person appointed to receive internal reports of suspicion, decide whether to submit a SAR to the NCA, and act as the firm's reporting point. In most regulated businesses this is the same person as the Money Laundering Reporting Officer.
Office of Financial Sanctions Implementation
Part of HM Treasury and established in 2016. OFSI ensures UK financial sanctions are understood, implemented and enforced. It issues licences, investigates suspected breaches and can impose monetary penalties of up to one million pounds or 50 percent of the value of the breach.
OFSI Consolidated List
The list maintained by OFSI of all persons and entities designated under UK financial sanctions. Regulated businesses screen customers and transactions against it.
Ongoing Monitoring
The continuing scrutiny of a business relationship, including transactions, to ensure they remain consistent with what the firm knows about the customer and to keep CDD information up to date.
Person with Significant Control
An individual recorded at Companies House who owns or controls a UK company, broadly anyone holding more than 25 percent of shares or voting rights or who otherwise exercises significant influence or control.
Placement, Layering and Integration
The classic model of money laundering. Placement introduces criminal cash into the financial system, layering moves it through transactions to obscure its origin, and integration returns it to the criminal as apparently legitimate funds.
Policies, Controls and Procedures
The documented policies, controls and procedures a regulated business must put in place to manage and mitigate the risks identified in its risk assessment. They must be proportionate to the size and nature of the business and kept current.
Politically Exposed Person
An individual entrusted with a prominent public function, such as a senior politician, judge or military officer, together with their family members and known close associates. PEPs must be subject to enhanced due diligence because their position can be misused for corruption.
Examples include a senior politician, a judge or a board member of a state-owned company, along with their family. Being a PEP is not a barrier to doing business, but it requires enhanced due diligence.
Principal Money Laundering Offences
Section 327 (concealing, disguising, converting, transferring or removing criminal property), section 328 (entering into or becoming concerned in an arrangement that facilitates the acquisition, retention, use or control of criminal property) and section 329 (acquiring, using or possessing criminal property).
Proceeds of Crime Act 2002
The Act that creates the principal money laundering offences and the reporting regime. Sections 327 to 329 cover concealing, arranging and acquiring criminal property, with sentences of up to 14 years.
Proliferation Financing
The provision of funds or services used to manufacture, acquire or move weapons of mass destruction. Since 2022 regulated businesses must specifically assess and manage proliferation financing risk in their risk assessments.
Record Keeping
The requirement to keep customer due diligence records and supporting documents, generally for five years after the end of the business relationship or the completion of an occasional transaction.
Red Flag
A warning sign that a transaction or customer may carry a higher risk of money laundering, for example reluctance to provide information, unusual payment routes or a transaction that makes little commercial sense. Red flags prompt further enquiry, not automatic refusal.
Relatives and Close Associates
The family members and known close associates of a politically exposed person. They are treated as higher risk because they can be used to hold or move funds on a PEP's behalf.
Reliance
An arrangement where one regulated business relies on another regulated business or individual, as permitted under the Money Laundering Regulations 2017, to carry out elements of customer due diligence when forming a business relationship. Reliance can save duplication, but legal responsibility for the CDD remains with the firm that relies on it.
Risk-Based Approach
The principle underpinning the Regulations: businesses must assess where they are most exposed to money laundering and terrorist financing and direct their effort and resources accordingly, rather than applying identical checks to every customer.
Sanctions and Anti-Money Laundering Act 2018
The Act that gives the UK the legal power to make, amend and lift its own financial and trade sanctions and to update the money laundering regime, particularly following the UK's departure from the European Union.
Simplified Due Diligence
A lighter level of due diligence permitted only where a business relationship or transaction presents a demonstrably low risk of money laundering or terrorist financing. The firm must still monitor the relationship and be able to justify the low-risk decision.
Source of Funds
Evidence of where the money used in a specific transaction has come from, for example a salary, a property sale or a bank loan. It answers the question of how this particular payment was funded.
For example, a buyer might evidence funds from a recent property sale, a salary or a bank loan. Establishing it is routine in higher value or cash purchases.
Source of Wealth
Evidence of how a person accumulated their overall wealth over time, for example through a business, inheritance or investments. It is broader than source of funds and is usually required as part of enhanced due diligence.
For example, wealth built through a long-running business, an inheritance or investments. It is broader than source of funds and is usually needed during enhanced due diligence.
Suspicious Activity Report
A report submitted to the National Crime Agency where a person knows or suspects, or has reasonable grounds to suspect, money laundering or terrorist financing. SARs are the main way the regulated sector alerts law enforcement to suspicious activity.
A negotiator or dealer who suspects a transaction may involve criminal funds reports internally to the MLRO, who decides whether to submit a SAR. FCS supports firms with SAR decisions and drafting.
Terrorist Financing
Providing or collecting funds intended to be used for terrorism. Unlike money laundering, the funds themselves may have a legitimate origin, which makes terrorist financing harder to detect.
Tipping Off
An offence in the regulated sector of disclosing to a customer or third party that a suspicious activity report has been made, or that a money laundering investigation is being or may be carried out, where that disclosure is likely to prejudice the investigation.
UK Financial Intelligence Unit
The unit within the National Crime Agency that receives, analyses and distributes the suspicious activity reports submitted by the regulated sector.
Ultimate Beneficial Owner
The natural person at the very top of an ownership chain who ultimately benefits from or controls an entity, once layers of companies, trusts or nominees have been seen through.
Property Market
10 termsBeneficial Owners, Officers and Managers
The people who own, control, direct or significantly influence an agency, including directors, partners, shareholders and senior managers. HMRC requires their details on the AML registration, and they set the compliance tone from the top.
Buying Agent
A professional who searches for and negotiates the purchase of property on behalf of a buyer. Buying agents can fall within the definition of estate agency work and so within the scope of HMRC supervision.
Conveyancing Risk
The money laundering risk arising during the legal transfer of property, where large sums move between parties. Agents, conveyancers and lenders each have a part to play, and gaps between them can be exploited.
Estate Agency Business
A business carrying out estate agency work, broadly introducing buyers and sellers of property and assisting with the transaction. Estate agency businesses must register with HMRC for anti-money laundering supervision and comply with the Regulations.
For example, a residential sales agency introducing buyers and sellers is an estate agency business and must register with HMRC. FCS supports estate and letting agencies across the whole compliance process.
Financial Sanctions Checks for Agents
The requirement on estate and letting agents to screen the parties they deal with against the UK sanctions list. These checks apply to all agents, including for lettings of any value, and are separate from the wider AML registration thresholds.
Letting Agency Business
Letting agency work is brought within the Regulations where the rent is £10,000 or more a month, for lettings of a month or longer. The threshold moved from €10,000 to £10,000 on 30 June 2026 under SI 2026/621. Such businesses must register with HMRC, although sanctions duties apply to all lettings regardless of value.
For example, a let where the rent is £10,000 or more a month brings the lettings work within the Regulations, while sanctions checks apply to every let regardless of rent.
Property Sourcing Agent
A person who finds and secures property on behalf of investors or buyers. Where this involves introducing parties or acting in the transaction it can amount to estate agency work, bringing the sourcing agent within the Regulations.
Propertymark
The leading UK professional body for estate and letting agents. It provides standards, guidance and support on compliance, including anti-money laundering obligations, to its member agencies.
Source of Funds in Property
Evidence of how a buyer is funding a purchase, for example savings, a mortgage, a property sale or a gift. Establishing it is a routine but essential part of customer due diligence in a property transaction, particularly for high-value or cash purchases.
Super-Prime Property
HMRC treats super-prime property as residential property valued at £5 million or over in London and the South East (the nine counties of Berkshire, Buckinghamshire, East Sussex, Hampshire, the Isle of Wight, Kent, Oxfordshire, Surrey and West Sussex), and £1 million or over elsewhere in the UK. High values, overseas buyers and complex ownership structures make these transactions a focus for money laundering risk and enhanced due diligence.
No terms match your search. Try a different word or clear the filter.
Further reading
5 articlesFrequently asked questions
What is anti-money laundering (AML)?
Anti-money laundering is the framework of laws, regulations and procedures that regulated businesses must follow to detect, prevent and report the laundering of criminal proceeds. In the UK it is built on the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2017.
What is a Suspicious Activity Report (SAR)?
A Suspicious Activity Report is a report submitted to the National Crime Agency where a person knows or suspects, or has reasonable grounds to suspect, money laundering or terrorist financing.
Do letting agents need to do AML checks?
Letting agency work is brought within the Money Laundering Regulations where the rent is £10,000 or more a month. Financial sanctions checks, however, apply to all letting agents regardless of the rent.
What does OFSI do?
The Office of Financial Sanctions Implementation is part of HM Treasury. It ensures UK financial sanctions are understood, implemented and enforced, issues licences, investigates suspected breaches and can impose monetary penalties.
Need help applying any of this?
FCS Compliance helps property market businesses meet their AML obligations with audits, training, customer due diligence and HMRC inspection support.
Speak to the teamAbout this glossary. Definitions are written in plain English for general guidance and were verified against authoritative sources including GOV.UK and HMRC, the Office of Financial Sanctions Implementation (HM Treasury), the Financial Action Task Force, the National Crime Agency and UK legislation. Last reviewed 7 August 2026.
This page provides general information only and is not legal advice. Thresholds and rules change. The euro thresholds in the Money Laundering Regulations were converted to sterling on 30 June 2026 by SI 2026/621, and this glossary reflects that change.