Sanctions and anti-money laundering (AML) compliance are often confused, but they serve distinct purposes.
AML laws focus on preventing financial crime and money laundering.
Sanctions checks identify individuals subject to government-imposed restrictions, such as financial penalties, asset freezes, and travel bans.
Currently, letting agents are only required to conduct sanctions checks if the monthly rent is greater than £8,300. However, by May 14, 2025, this threshold will be removed. Agents will then have mandatory reporting obligations under financial sanctions laws, meaning they must screen property owners at the point of instruction and tenants before signing a letting agreement. Failure to comply can lead to huge fines or even criminal prosecution.
What Is a Sanctions Check?
A sanctions check screens individuals, entities, and countries taking into consideration government-imposed sanctions lists. These lists identify parties banned from conducting business due to their involvement in criminal activities such as:
Terrorism
Corruption and financial crime
Drug trafficking
Human rights violations
Sanctions may include:
Freezing financial assets
Banning real estate transactions
Restricting financial services & investments
Imposing travel bans
Revoking or denying visas
This means that letting agents must screen prospective tenants and property owners against the UK sanctions list and report any matches to the Office of Financial Sanctions Implementation (OFSI).
Why Are These Changes Happening?
The government is closing loopholes that allow sanctioned individuals to rent properties undetected. By removing the £8,300 threshold, all letting agents must now conduct sanctions checks—helping to prevent financial crime and protect businesses from unintentional involvement.
How to Conduct a Manual Sanctions Check
While agents can perform sanctions checks manually, the process is slow and prone to error. Here’s how it works:
Access the UK sanctions list – A government database of sanctioned individuals and entities.
Manually search tenant/landlord names– Enter names into the system to identify potential matches.
Verify matches– If a name appears, further investigation is required (but the list lacks unique identifiers like date of birth or address).
Report to OFSI – Even if you’re certain, you must notify OFSI and wait for their response.
Document the check – Keep detailed records to prove compliance during audits.
Challenges of Manual Checks
High risk of human error– Common names appear multiple times, making verification difficult.
Delays and void periods – OFSI takes weeks to respond, slowing down tenancy agreements.
Growing sanctions lists – New names are added daily, requiring constant monitoring.
