Letting agents must prepare for far more stringent anti-money laundering rules, but greater clarity is needed to avoid potential confusion, according to Propertymark.

Earlier this year, the Office of Financial Sanctions Implementation (OFSI) consulted on extending financial sanctions reporting obligations to letting agents and the UK government has decided to apply these measures to letting agency work but without reducing the threshold in which letting agents must register for Anti Money Laundering (AML) supervision.

Regulations have been laid in the UK Parliament which means the reporting obligations will apply to all letting agency work and not just in relation to lettings where there is a monthly rent of €10,000 or more.

Financial sanctions include restrictions on designated persons, such as freezing financial assets, as well as wider restrictions on investment and financial services.

From 14 May 2025, letting agents will be subject to reporting obligations as they will be added to the list of “relevant firms” under the financial sanctions regulations.

This means letting agents will be required to inform OFSI as soon as practicable if they know or reasonably suspect a person is a designated person or has failed to comply with sanctions regulations. This includes the amount or quantity of any funds or economic resources held or managed by the agent for that customer.

OFSI has published new guidance in relation to letting agents to provide further information on reporting obligations for letting agents and additional industry engagement is expected in the New Year.

Nathan Emerson, CEO at Propertymark, commented: “Propertymark has long argued that the existing threshold for AML supervision for letting agents should be removed to reduce the risk of cash payments being used to ‘clean’ dirty money.

“Whilst we recognise that the UK government wants to tackle financial sanctions breaches that are occurring below the threshold, this is a missed opportunity to level the playing the field for letting agents in terms of AML supervision, Customer Due Diligence and financial sanctions reporting obligations.

“HM Treasury must continue to engage widely with the sector to avoid misinformation and confusion among agents and financial institutions. Furthermore, we will continue to urge HM Treasury to reflect on the impact of the proposals and work to remove the threshold within the Anti Money Laundering Regulations to bring greater clarity to the sector and ensure it is less vulnerable to criminal activity.”

The new guidance published by the OFSI can be viewed here.