Sanction Checks For Letting Agents and Landlords: What You Need To Know

Financial sanctions are UK government measures that can freeze assets and restrict dealings with named people, companies and organisations (known as “designated persons”). For the private rented sector, this matters because letting a property can involve making funds or services available to a designated person, or receiving funds from them. This is why sanction checks for letting agents and landlords are so important.

Letting agents are seen as “relevant firms” for financial sanctions reporting, meaning they must report to the Office of Financial Sanctions Implementation (OFSI) if they know or reasonably suspect a landlord or tenant is a designated person, or a sanctions breach has occurred, at specific points in the letting process.

Landlords vs letting agents: who must do what?

Letting agents (England):

• Must understand and comply with financial sanctions reporting obligations.

• The duty to report applies once you are acting for a landlord, or once a tenant’s offer has been accepted and you are “in the course of concluding” the agreement.

  
  

Landlords:

• If you self-manage, you are not automatically pulled into the same “relevant firm” reporting regime just because you are a landlord, but you still have legal risk if you end up dealing with a designated person. The practical expectation is that you cooperate with checks and provide accurate information quickly.

Who should be sanction checked?

In practice, agents should screen:

• Landlords at onboarding or instruction.

• Tenants once an offer is accepted and you are progressing the agreement.

• Guarantors, where they will pay rent directly or meaningfully engage in the tenancy arrangement, because they may be part of the financial flow and relationship.

Where to check?

The UK’s sanctions content is published on GOV.UK, including the UK Sanctions List. This is intended to be the single source for UK sanction checks, with older consolidated list references being retired.

What a “sanctions match” looks like in the real world

Most “matches” are false positives. A name match alone is not enough. You need to compare identifiers such as:

• Full name and aliases

• Date of birth

• Nationality

• Address

• Company details (registration number, directors)

Your goal is to decide whether it is:

• Not a match (record why and proceed), or

• A potential match (pause and escalate), or

• A confirmed match (report immediately and do not progress with the working relationship in a way that could breach sanctions)

A sensible workflow for letting agents

1) Build it into onboarding and referencing

Add sanctions screening into the same pack as ID checks and referencing, with a simple rule: no tenancy moves forward until screening is recorded and signed off.

2) Define the trigger points clearly

OFSI guidance is explicit that the reporting obligation does not kick in at the enquiry stage. For tenants, it applies once the landlord has accepted an offer and you are concluding the agreement. For landlords, it starts when they instruct you.

3) Record evidence

Keep a short audit trail:

• Date and time of sanctions check search

• Source used (UK Sanctions List)

• Search terms and result

• Outcome and reviewer name

4) If you suspect a match, pause and escalate

Do not accept funds, sign agreements or hand over keys until you have escalated internally and taken advice where needed. If the suspicion threshold is met, you must report to OFSI.

What to do if you have a suspicion

OFSI uses a “knew or had reasonable cause to suspect” threshold for reporting by relevant firms. If that threshold is met, report promptly. Do not try to “test” the tenant or landlord by pushing the process forward.

Also, be careful with payments. If you are holding client money, a sanctions issue can become a serious operational problem quickly, which is why agencies should have a documented escalation route and a nominated sanctions lead.

How this differs from anti-money laundering rules

Sanctions screening and anti-money laundering precautions are related but not the same.

• Sanctions: applies to designated persons and specific restrictions, with OFSI as the key authority for financial sanctions.

• AML for lettings: has historically applied to letting agency work only above a high rent threshold (commonly referenced as €10,000 per month) and involves HMRC supervision and wider customer due diligence duties.

Even if you are not in scope for AML as a letting agent, you can still be in scope for sanctions reporting.

A simple best-practice policy you can adopt

If you want one rule that works in most agencies, use this:

• Check landlords at instruction.

• Check tenants at offer acceptance stage.

• Check guarantors where they will pay or formally support the agreement.

• Re-check if there is a long delay between offer acceptance and move-in, or if key details change.

This keeps you aligned with OFSI’s timing guidance and reduces the odds of missing a reportable suspicion.

Outsource legal checks

As part of our outsourced property management package, we ensure all legal requirements are met before the tenancy starts, including checking references and sanction checks. Take this burden from your hands and ensure your tenancies begin on the right legal footing. Get in contact today.