From the May 14th 2025, changes are coming to how letting agents in the UK will have to manage landlord and tenant checks, specifically regarding sanctions. Going forward, agents will be required to follow the same reporting obligations as other “relevant firms” under financial sanctions laws, and this will be regardless of the rental agreement value of the property which wasn’t the case before.
Financial sanctions are rules set by the UN or UK to help protect national security or support foreign policy. They limit who can access money or financial services, often aiming to stop harmful behaviour, prevent criminal activity like terrorism or the funding of weapons, and make sure stolen assets can be safely returned to their rightful owners.
What are the new sanctions checks?
From the deadline, letting agents will need to:
- Screen all tenants and landlords against the UK Sanctions List.
- Confirm ownership of properties to be rented and screen beneficial owners against the sanctions list.
- Where companies or other legal entities are the landlords or owners, confirm the ultimate beneficial owner (UBO) and screen them.
- Report any positive matches to the Office of Financial Sanctions Implementation (OFSI).
To stay compliant, letting agents are going to have to absorb a lot more work that they didn’t have to do before, particularly if they’re going to be completing the checks manually. While these don’t have to be done before May 14th, there are some things that can be started already to get ahead:
What should letting agents do before the sanctions deadline?
1. Review the guidance from OFSI
It might seem rather obvious, but it goes without saying, it’s worth familiarising yourself with the OFSI’s guidance, specifically that for letting agents, on the upcoming sanctions. In short, what the new sanctions are and will involve for lettings agents are listed above.
2. Review and assess your existing processes
Reassess existing client screening processes. It’s worth identifying any gaps in your current protocols and ensure that your due diligence measures align with the latest regulatory requirements.
3. Setup new screening processes
Ensure you have updated your compliance Policies, Controls and Procedures (PCP’s) so that you comply with the new guidance.
4. Get on top of your record-keeping
Maintain detailed, up-to-date records for all your landlords and tenants. This practice is essential not only for compliance but also for building an audit trail that demonstrates your proactive approach to regulatory changes. If you are ever audited by HMRC having this all in place will be critical.
5. Setup your reporting structure
If your team were to discover any landlord or tenant that are on the sanctions list, would they know what to do or how to report it? Ensure you have clearly documented and readily available reporting procedures to OFSI.
6. Staff training and awareness
Get all your staff up to speed on understanding their obligations under the new financial sanctions before the deadline.
How can letting agents conduct sanction checks?
You have two options for conducting sanctions checks: doing every check manually or automated the process.
- Manual checks: This process involves accessing the publicly available sanctions list yourself and manually entering landlord and tenant details to check for matches. While it’s very doable, this process can be time-consuming and prone to errors
- Automated checks: A quicker and more reliable solution is to automate the process of completing sanctions checks, streamlining the process, reducing the risk of human error, and ensuring full compliance.
How can Coadjute help with sanction checks?
Compliance is our bread and butter. Our Assured Compliance service provides comprehensive sanctions support, ensuring compliance through multiple layers of protection:
- We setup an automated process for all sanctions checks which can be ordered at the click of a button.
- Our team take the hassle off your hands by running all the necessary checks for you, guaranteeing you meet the new requirements with confidence.
- Our experts provide in-depth training and guidance on the framework ensuring your team understood why certain processes are required and how to implement them.
- We’ll work with you to implement detailed record-keeping and internal controls that are easily auditable.
