Financial Sanctions guidance for Letting Agents
As from the14th May 2025, letting agents will be subject to reporting obligations in order to facilitate Office of Financial Sanctions Implementation OFSI’s aim of encouraging better sanctions compliance.
Why Letting Agents?
Letting Agents have been added to the list of “relevant firms” under financial sanctions regulations.
Under financial sanctions regulations, a letting agent is described as “a firm or sole practitioner (“P”) that carries out, or whose employees carry out, letting agency work-
“Letting agency work” is defined as follows:
“letting agency work” means work—
(a). consisting of things done in response to instructions received from
(i) a person (a “prospective landlord”) seeking to find another person to whom to let land for a term of a month or more, or
(ii)a person (a “prospective tenant”) seeking to find land to rent for a term of a month or more, and
(b) done—
(i) in relation to a prospective landlord, from the point that the prospective landlord instructs P [i.e the letting agent], or
(ii) otherwise in the course of concluding an agreement for the letting of land for a term of a month or more.
What is a Relevant Firm?
A relevant firm is ONLY required to report this information to OFSI if the information or other matter on which its knowledge or cause for suspicion is based came to light DURING the course of business; this means carrying out “letting agency work” .
Under the sanctions, the letting agent must include:
the information or other matters on which the knowledge or suspicion is based
any information held about the person or designated person by which they can be identified (photo ID, references, application forms, proof of address, etc)
if there is reasonable cause to suspect that a person is a ‘designated person’ and that person is a customer of a relevant firm, the letting agency MUST state the nature and amount or quantity of any funds or economic resources held on behalf of that customer.
The Reporting Process
As per the reporting obligations, a relevant firm is required to report to OFSI as soon as practicably possible. It is important to note, that there is no monetary threshold. The reporting obligation will apply to all tenancies and letting transactions.
If the relevant firm knows or has reasonable cause to suspect that a person:-
(i) is a designated person (someone on the Sanctions List);
or (ii) has committed a breach of financial sanctions regulations.
Where the designated person is a customer of the relevant firm, the relevant firm must also report the nature and amount or quantity of any funds or economic resources held for the customer at the time when there was knowledge or suspicionThe reporting obligations will be triggered at different points in relation to prospective landlords and prospective tenants:-
When a letting agent does work in response to instructions received from a prospective landlord, and that work is done in relation to that prospective landlord, the reporting obligation applies to the letting agent from the point that the prospective landlord instructs the letting agent. In other words, as a letting agent, from the point at which the letting agent is instructed by a prospective landlord
if the letting agent knows or has reasonable cause to suspect that they are a designated person or have committed a breach of financial sanctions, they will be obliged to report this to OFSI.
In response to instructions from the prospective landlord, however, the letting agent is not obliged to issue a report to the OFSI is there is knowledge or reasonable cause to suspect that a prospective tenant is a designated person or has breached financial sanctions – UNTIL the point that a prospective tenant’s offer is ACCEPTED by the landlord.
This is because of the large number of prospective tenants a letting agent could encounter during the course of their work for the prospective landlord.
A letting agent is obliged to report in relation to a prospective tenant from the point that the prospective landlord and tenant are “in the course of concluding an agreement for the letting of land for a term of a month or more”.
This means that once a prospective tenant’s offer has been accepted by the prospective landlord, i.e. they are “In the course of concluding an agreement”, if the letting agent then knows or has reasonable cause to suspect that the prospective tenant is a designated person or has breached financial sanctions, they are obliged to report this to OFSI.
We will be providing training courses on this subject in March 2025.