Guidance

Financial sanctions guidance for letting agents

Updated 18 March 2025

This guidance is produced by the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, the authority responsible for the implementation of financial sanctions in the UK.

This guidance should be considered supplementary to, and not a replacement for, OFSI’s general guidance. Further sources of information that may prove helpful are listed at the end of this guidance.  

This guidance does not represent legal advice.  

If you are unsure about your obligations in a given case, you should consider seeking independent legal advice. 

OFSI is responsible for improving the understanding, implementation and enforcement of financial sanctions in the UK. We publish a list of individuals and organisations subject to financial sanctions as well as general guidance to help you comply. This is available on OFSI’s GOV.UK webpages.

1. What are financial sanctions? 

Financial sanctions help the UK meet its foreign policy and national security aims, as well as protect the integrity of its financial system. Financial sanctions include restrictions on designated persons, such as freezing financial assets, as well as wider restrictions on investment and financial services. UK financial sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons, wherever they are in the world. 

For general information on financial sanctions, your obligations, and licensing, OFSI provides general guidance.

In addition to the general guidance and this letting agents guidance, OFSI provides a range of sectoral and geographic guidance. You should also consider guidance provided by the Department for Business and Trade and HMRC.   

The names of designated persons (DP) appear on the consolidated list. This enables immediate publication following a decision to make or amend a designation, limiting the opportunity for asset flight.

2. Reporting obligations

Certain types of business are subject to reporting obligations as “relevant firms” under financial sanctions regulations. These reporting obligations are broadly the same across each of the financial sanctions regimes; see regulation 70 of the Russia (Sanctions) (EU Exit) Regulations for an example.  

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

Extending reporting obligations to this sector will facilitate OFSI’s aim of encouraging better sanctions compliance, as well as improving OFSI’s understanding of how financial sanctions are being implemented in the impacted sector, raising impacted businesses’ awareness of their sanctions obligations, and assisting OFSI in identifying potential circumvention gaps and financial sanctions breaches. 

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.

Under the reporting obligations, a relevant firm is required to report to OFSI as soon as practicable if it knows or has reasonable cause to suspect that a person (i) is a designated person; 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 to OFSI the nature and amount or quantity of any funds or economic resources held by it for the customer at the time when it first had the knowledge or suspicion. 

However, 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 it “in the course of carrying on its business.” For letting agents, “in the course of carrying on its business” is defined as in the course of carrying out “letting agency work” (as set out above). This means, for example, that a letting agent would not be subject to the reporting obligation if the information came to a letting agent’s employee in their personal capacity.  

When reporting to OFSI under the sanctions reporting obligations, you must include:  

• the information or other matter on which the knowledge or suspicion is based  

• any information you hold about the person or designated person by which they can be identified  

• if you know or have reasonable cause to suspect that a person is a designated person and that person is a customer of your relevant firm, you must also state the nature and amount or quantity of any funds or economic resources held by you for that customer.  

Information on how to report to OFSI can be found in section 5 of OFSI’s general guidance on GOV.UK.

3. No monetary threshold

The reporting obligations will apply in relation to letting agency work irrespective of the value of any rental agreement.  

To note, this is in contrast to the definition of letting agency work under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“the MLRs”), under which letting agency work relates to lets with a rent of 10,000 euros or more.

4. Instructions from prospective landlords or prospective tenants

The reporting obligation bites on letting agents at different points in relation to prospective landlords and prospective tenants, as set out below:

• 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 you are instructed by a prospective landlord, if you know or have reasonable cause to suspect that they are a designated person or have committed a breach of financial sanctions, you will be obliged to report this to OFSI. 

• During the course of work done in response to instructions from the prospective landlord, however, you are not obliged to report if you have 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.

• However, 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”. What this means is 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.  

• Finally, if you are a letting agent and you are doing work in response to instructions from a prospective tenant seeking to find land to rent, the reporting obligation again only applies from the point that the parties are “in the course of concluding an agreement for the letting of land” – in other words, at the point where the prospective tenant has found a prospective landlord, their offer has been accepted, and they are in the course of concluding an agreement. If at that stage the letting agent knows or has reasonable cause to suspect that either the prospective tenant or prospective landlord is a designated person or has committed a breach of financial sanctions legislation, they are obliged to report this to OFSI.

5. Meaning of “Instructions” and “firm or sole practitioner”

Letting agency work means work consisting of things done in response to “instructions” received from either a prospective landlord or prospective tenant seeking to find someone to whom to let land or seeking to find land to rent. 

“Instructions” here are considered the result of a prospective landlord/tenant formally instructing, engaging or authorising a letting agent to act on their behalf to find land to rent or to find someone to whom to let land. Instructions are not meant in an informal sense, such as merely asking someone to do something.

“Letting agency work”, meanwhile, is defined as work carried out by a “firm or sole practitioner”. In other words, it cannot be carried out by an individual acting in their personal capacity. For example, if friend A (a landlord) asked friend B (in their personal capacity) to help them find a tenant by asking around their acquaintances to see if anyone needed to rent a flat, and friend B asked a couple of their acquaintances if they would be interested, friend B would not be carrying out “letting agency work”. This is because friend B would neither be “a firm or sole practitioner”, nor would friend B have been formally instructed, engaged or authorised by friend A to act on their behalf.

6. Work that “letting agency work” does not include

The definition of “letting agency work” also specifies that letting agency work does not include certain listed things, if a firm or sole practitioner (or employees of the same) do not do anything else within the definition of “letting agency work”. The list of things that letting agency work does not include is set out below (please note that it is the same as the list of things that are stated not to constitute letting agency work in the MLRs): 

(a) publishing advertisements or disseminating information;  

(b) providing a means by which a prospective landlord or a prospective tenant can, in response to an advertisement or dissemination of information, make direct contact with a prospective tenant or a prospective landlord;  

(c) providing a means by which a prospective landlord and a prospective tenant can communicate directly with each other;  

(d) the provision of legal or notarial services by a barrister, advocate, solicitor or other legal representative communications with whom may be the subject of a claim to professional privilege or, in Scotland, protected from disclosure in legal proceedings on grounds of confidentiality of communications.” 

For example, if you are a newsagent, who at a prospective landlord’s request, puts up a notice of the prospective landlord’s property to let in the newsagent’s window (thus publishing advertisements/disseminating information), you are not considered to be carrying out letting agency work. This is because the newsagent is not doing anything else falling within the definition of “letting agency work”, because the newsagent has not received “instructions” from the prospective landlord to find another person to whom the prospective landlord can let land, as the newsagent has not been formally engaged or employed to act on the prospective landlord’s behalf in this regard. The newsagent is simply putting an advertisement in its window.

7. Further Support 

HMRC’s guidance on Anti-Money Laundering Supervision for Letting agents 

For further support with UK financial sanctions, you can: 

• Consult OFSI’s general, geographic and sectoral guidance 

• Access OFSI’s webinars 

• Sign up to get UK sanctions email alerts

• Email OFSI on ofsi@hmtreasury.gov.uk