New Anti-Money Laundering (AML) and Financial Sanctions Regulations (FSR) are being introduced for letting agents, significantly expanding compliance obligations. 

The government says these changes, which will be effective from May 14 2025, aim to enhance oversight and reduce risks associated with financial crime.

Garrett Foxon, chief executive of automated client accounting platform Lettspay, sets out what letting agents need to know and action.

Expanded Reporting Obligations – From May 2025 letting agents must comply with financial sanctions regulations. Key requirements include:

• Reporting to the Office of Financial Sanctions Implementation (OFSI) if you know or suspect that a person or entity is a “designated person” under financial sanctions;

• Reporting any funds or economic resources held or managed for such persons;

• Ensuring reports are made “as soon as practicable.”

Who is Covered? – Unlike previous AML rules, the €10,000 monthly rent threshold (designated as a high end let) no longer applies for these reporting obligations. This means all letting agency work is covered, regardless of rental value.

Because of the high end let threshold, many letting agents will simply not have been carrying out customer due diligence (CDD) as required under Money Laundering Regulations and will therefore now need to prepare and ensure they are up to speed with requirements.

What Are Financial Sanctions? – Financial sanctions are measures to restrict access to funds and resources by individuals or entities involved in illegal activities, such as terrorism or money laundering. This includes:

• Freezing financial assets.

• Restrictions on financial services and investments.

Consequences of Non-Compliance – Failure to comply with these regulations can lead to significant penalties, including unlimited fines and other enforcement actions.

Guidance and Support – The OFSI has issued specific guidance for letting agents and will be holding industry engagement sessions prior to the implementation date next year to address concerns and provide further clarity.