Anti-money laundering guidance for supervised businesses

AMLG3300 - Risk Assessment of Letting Agent Businesses

About this risk assessment

This risk assessment by HMRC is prepared and made available to you under Regulations 17 and 47 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (referred to as ‘the regulations’ throughout this guidance).

It tells you about the risks that your business might face as a letting agent business (LAB).

There is separate guidance to support LABs in complying with their obligations under the regulations in Part 1 and in AMLG2300.

In line with Regulations 18 and 18A of the regulations, all LABs must carry out a risk assessment to identify and assess the risks to their business of:

• money laundering
• terrorist financing
• proliferation financing

You must take this risk assessment into account when carrying out your business’s own risk assessment.

You must also read and consider other relevant documents such as:

• the national risk assessment of money laundering and terrorist financing 2025 (We strongly recommend you read the whole document as important risk information is likely to be missed if only parts of the National Risk Assessment are considered. In particular, you should read and consider Section 2, 3, 4 and 5).
• the national risk assessment of proliferation financing published in 2021.
• guidance produced on the Financial Action Task Force (FATF) website.
• the Office of Financial Sanctions Implementation (OFSI) threat assessment for property.

As a LAB you must take appropriate steps, taking into account of the size and nature of your business, to identify and assess the risks your business may be exposed to.

You must consider the following risk factors:

• your customers
• the countries and geographical areas of your operations
• each LAB service or combination of services you provide
• the size, nature or frequency of your business transactions
• how you provide your services and interact with your customers (your delivery channels)

The steps you have taken to identify and assess these risks must be fully reflected in your business’s risk assessment and you must keep an up-to-date record in writing of these steps. You must be able to provide an up-to-date copy of your risk assessment, and the information you have used to carry out that risk assessment, to HMRC when requested.

Property transactions, including lettings, remain attractive to criminals as a means of money laundering.  Whilst the  National Risk Assessment 2025 (NRA 2025) reduced the risk rating for LABs, it noted that inherent vulnerabilities in the sector remain. You must take a risk-based approach to effectively manage and mitigate the inherent risks your business faces. An effective risk-based approach will require you to carry out your risk assessment in line with your business model and the listed risk factors. Your risk assessment must identify and assess any risks where your business could be exposed to money laundering, terrorist financing and proliferation financing.

This risk assessment by HMRC is intended to help you to identify and assess the risks that your business may be exposed to. When you have identified the risks that are relevant to your business, you must put in place policies, controls and procedures to effectively manage and mitigate those risks.

You must apply any additional measures as set out in the regulations, particularly where there is a high or higher risk of:

• money laundering
• terrorist financing
• proliferation financing

If you begin to provide additional or new services, or if you change how your services are provided, or how your business operates, you must make sure your risk assessment reflects these changes. Your policies, controls and procedures (PCPs) must also be updated to reflect how you will effectively manage and mitigate any additional or new risks, before you start the new services or business operating model.

The risk characteristics within this risk assessment are HMRC’s assessment of risks for the LAB sector. Whilst all these risks must be taken into account in your risk assessment and PCPs, you may also find additional risks when evaluating your own business.

The requirements in the regulations for risk assessment and associated policies, controls and procedures to manage those risks only apply to rentals over the LAB threshold.

The presence of one or more of the risk indicators contained within this risk assessment in LAB transactions means that there is a heightened risk of money laundering, terrorist financing or proliferation financing. You should consider carefully the risks involved and whether enhanced due diligence and/or enhanced ongoing monitoring measures should be applied, in line with regulation 33(1)(ii) of the regulations and whether a suspicious activity report (SAR) should be submitted.

 

Risk Characteristics

Letting agency work means work consisting of things done in response to instructions received from a person (a “prospective landlord”) seeking to find another person to whom to let land, or a person (a “prospective tenant”) seeking to find land to rent, and to be done in a case where an agreement is concluded for the letting of land for a term of a month or more, and at a rent which during at least part of the term is, or is equivalent to, a monthly rent of £10,000 or more. This covers both residential and commercial property.

All letting agents in England are required by law to perform right to rent checks on tenants. All letting agents across the UK have additional financial sanctions reporting obligations. However, customer due diligence (CDD) is only required in relation to activities within the scope of the regulations.

LABs only need to conduct CDD on:

• rents over £10,000 per month or equivalent
• those that are likely to exceed that threshold during the period of the rental period (for example, tenancies or leases with built in rent increases)

Landlords may have purchased the property with illicit funds, tenants may be paying rent with illicit funds (as a realisation of their proceeds), or the landlord and tenant may be part of the same criminal group, laundering their funds under the guise of rent payments. This anonymity is exacerbated by the potential exposure to high-risk jurisdictions, complex structures and lack of transparency when letting agents pay rent into offshore accounts without knowing the ultimate beneficial owner.

LABs handle client money, including fees, deposits, and rent, which brings increased risks. Funds are often moved quickly. Increasing demand for rental property makes it normal for deposits to be transferred on the day of viewing.

The services provided by LABs can be used by criminals to:

• rent out property purchased with the proceeds of crime
• continue to benefit from their crimes as the property can be used as place to live or a place of business, or both
• support the channelling of illicit funds through layers of corporate structure
• help obscure the true criminal origin of illicit funds

As a LAB you must submit a Suspicious Activity Report to the National Crime Agency (NCA) as soon as possible if you know or suspect that a person is engaged in or attempting money laundering or terrorist financing.

Find out how to submit a Suspicious Activity Report on the NCA website.

Money laundering

The NRA 2025 reports that property transactions are seen in all typologies and predicate offences for money laundering, including corruption, sanctions evasion, modern slavery and human trafficking, organised immigration crime, drugs and fraud. The money laundering risks posed by the property sector overall have been assessed by the NRA 2025 as having a higher risk of money laundering. Use of property to facilitate money laundering is attractive to criminals at all values and locations in the UK. The NRA 2025 assesses the LAB sector to be exposed to low residual risks, given the understanding and management of those risks by the sector and supervisor, but notes that inherent risks/vulnerabilities remain.

The inherent risks to which LABs are exposed remain the same as in the NRA 2020. These are:

• tenants using illicit funds to pay the rent
• both parties to the transaction (landlord and tenant) being part of the same criminal group
• refund of upfront rental payments

Due to the high rental threshold which brings LAB into scope of the regulations, those LABs conducting relevant activity above the threshold are exposed to risks that the wider rental market may not be, including:

• high net worth persons
• politically exposed persons (PEPs)
• the use of complex legal arrangements   

The accessibility and speed with which transactions can occur also continues to expose LABs to money laundering risks. Compared to the purchase and sale of property, payments in the lettings markets move quickly, especially in securing properties with deposits.

Most LABs handle client money and their relationship with both the tenant and landlord of properties can provide crucial information to identify suspicious transactions. The NCA estimate that up to £10 billion could be laundered through the UK property market annually.

Money laundering risk indicators

The following information describes and explains risks that your business may face as a LAB.

You must consider and take into account all of the information in this risk assessment when carrying out your business’s own risk assessment.

LAB customers include both the landlord and tenant of rented property, and any intermediary acting on their behalf.

Residential property

There are money laundering risks for residential properties at all values and across all locations.

The high rental threshold for inclusion in the regulations means that regulated LABs are dealing with properties that are more likely to be within the definition of super-prime properties. HMRC considers super-prime properties to be those valued at £5 million or over in London and the Southeast (the nine counties of Berkshire, Buckinghamshire, East Sussex, Hampshire, the Isle of Wight, Kent, Oxfordshire, Surrey and West Sussex), and £1 million or over elsewhere in the UK.

High value property is frequently identified in relation to overseas predicate money laundering and fraud offences, with examples including the proceeds of corruption, and fraud in Eurasia (Russia, Belarus, Kazakhstan, Kyrgyzstan, Ukraine, Tajikistan, Turkmenistan, Uzbekistan, and part of the Caucasus (including Azerbaijan, Georgia and Armenia)), Angola, Ghana, Nigeria, China and Pakistan.

As such, any rental agreements involving customers from these countries, for super-prime property should be treated as higher risk.

Once owned by a criminal, a property can continue to generate funds for the criminal by being let out. Furthermore, the property itself can be used for criminal purposes, such as serious and organised crime as it provides somewhere for the criminal to live or base their operations, or both. Landlords or tenants using complex corporate structures to conceal beneficial owners, the ability to obscure the final destination of funds, and the regular flow of funds make letting agency businesses attractive for money laundering.

Criminals often buy property after using other money laundering methods. These methods can increase the distance between the property purchase and the criminal source of funds, making it seem that the money is clean. When the property is let out, the funds used to purchase that property can appear legitimate, reducing the apparent risk of the customer and proposed transactions by LABs.

Commercial property

Commercial property of any value can be used for money laundering purposes. This ranges from high street shops to properties used as factories, office blocks and hotels. The value of property varies throughout the UK, with the highest value properties typically concentrated in London. A higher proportion of commercial properties will have a rental amount over the LAB threshold than residential properties.

The use of complex legal arrangements and complex structures are commonly used by legitimate businesses.  Therefore, their use in a commercial let property is less likely to raise suspicions than in a residential let property.

Some characteristics of high-end commercial property limit its use to certain types of criminals. However, for criminals looking to profit from their criminality over a longer period of time, investing in high-end commercial property offers higher dividends than residential or lower-end commercial property. Complex, non-transparent company structures are also less likely to raise suspicions in the commercial sector than in the residential market. The use of unit and investment trusts, Real Estate Investment Trusts (REIT) and Open-Ended Investment Companies (OEIC) are common vehicles to invest in commercial property. See ‘the customer is a Real Estate Investment Trust (REIT)’ for more information.

Lower value commercial properties are more frequently exploited by UK based organised crime groups associated with drugs, waste crime, and modern slavery and human trafficking. These premises can be rented to be used as a base for cash-based money laundering or used to commit further criminal offences. Large scale cannabis cultivation using commercial premises is increasing in the UK. See ‘serious and organised crime’ for more information.

Serious and organised crime

There is a risk that residential properties, including those outside the scope of supervision (below the threshold), can be used for serious and organised crime, including drugs, illegal firearms, immigration crime, modern slavery and human trafficking. Properties can be used themselves for the commission of crime, storage of illegal material, or as housing for trafficked victims.

There is a growing trend for property (both residential and commercial) to be used for cannabis cultivation. Law enforcement data shows that there is a specific risk from Western Balkan Organised Crime Groups (OCGs). As such, the risks associated with any rental agreement involving customers based in, or linked to, Albania, Serbia, Montenegro, North Macedonia, Bosnia and Herzegovina or Kosovo should be carefully considered and managed, with appropriate due diligence applied.

 

Property used, or linked to, for organised immigration crime

Organised crime groups use multiple methods to facilitate irregular migrants’ entry into the UK through abuse of immigration rules, supply of false documents, air travel and other methods such as the use of small boats to cross the Channel. 

There is a risk that property can be used by organised crime groups to house irregular migrants, facilitate human trafficking and modern-day slavery, or provide irregular migrants with employment through cash-based businesses.

LABs must assess and identify customers or transactions that could have a link to organised immigration crime.

Specific risks include:

• Rent of houses of multiple occupancy.
• Rent of commercial property that could be used by cash-based businesses, such as barbers, hairdressers, car washes, vape shops and convenience stores.

 

Customer’s profile and behaviour

Where the profile of the customer is not in line with property being rented, for example, where the rental payments appear to exceed the customer’s means, this may indicate a risk associated with the source of rental funds.

Additionally, where there appears to be a link between the customers (landlord and tenant) for which no credible explanation is given, this may indicate an increased risk.

You should carefully consider the nature of the business relationship with your customer. For example, where the type or size of the property or location of the property suggests that another LAB would have been better placed to act, you should consider carefully why the customer chose your business. For example, use of a LAB specialising in commercial property to rent out their residential property.

Illogical patterns may indicate efforts to lower the risk of detection (if the same customer is dealing with other LABs more local to them but doesn’t want the scale of their activity known or collusion between agents and the beneficial owner or owners of the property).

There is an increased level of risk where the customer is secretive or evasive about any aspect of a rental agreement, such as, but not limited to:

• explaining the purpose of a rental
• is reluctant to provide CDD documents
• not providing information about source of funds or wealth when requested
• not allowing or attending viewings
• is reluctant to engage with professional services
• is reluctant to explain how the tenancy is being funded, and the rental value is not within their known means of affordability

Checking for adverse media on customers may show convictions or arrests for criminal activity including money laundering.

Politically exposed persons (PEPs)

PEPs are individuals who have been entrusted with a prominent public function and their close family and associates. These individuals, and their close relatives and business associates, face a heightened risk of being targeted by those seeking to exploit their positions, for the purposes of laundering illicit funds, or committing predicate offences such as bribery or other corruption related offending.

If you deal with a PEP, then you are required to conduct enhanced due diligence. LABs should be particularly vigilant when dealing with PEPs from a jurisdiction with high levels of corruption, money laundering or terrorist financing risks. PEPs may be the beneficial owners of property or may use complex corporate structures to obscure their beneficial ownership of a property.

The term PEP can apply to both UK and foreign nationals. Under UK law the starting point for LABs should be to treat domestic (UK) PEPs, their family members and close associates as inherently lower risk than non-domestic PEPs. They should apply a lower level of enhanced due diligence to domestic PEPs unless other risk factors are present. Non-domestic PEPs must be treated as high risk.

Super-prime property in particular is exposed to high levels of interest by PEPs.

The customer is from or linked to a FATF call for action (“black listed”) country

FATF call for action countries (formerly referred to in the Regulations as High Risk Third Countries (HRTCs)) are jurisdictions considered by the FATF to have strategic deficiencies in their regimes to counter money laundering, terrorist financing, or proliferation financing.

These countries are listed in the following publication, which is subject to change and revision: High-Risk Jurisdictions subject to a Call for Action (black list) on the FATF website.

Services provided to or from FATF black listed countries or customers, intermediaries and third parties who are resident, have their principal place of business, or are incorporated in one, pose a high risk of money laundering, terrorist financing and/or proliferation financing.

You must apply enhanced due diligence measures before you form a business relationship with a person established in a HRTC.

As the FATF lists are subject to change, there is a risk that that customers you have an existing business relationship with are established in a jurisdiction which may become black listed during the business relationship. You should factor this into your ongoing monitoring, alongside other considerations, like changes in country risk profiles, changes to sanctions and embargoes.

The Customer is from or linked to an overseas jurisdiction

Services provided to or from overseas jurisdictions or customers, intermediaries and third parties who are resident, have their principal place of business, or are incorporated overseas may pose an increased risk of money laundering, terrorist financing or proliferation financing.

In determining the appropriate customer due diligence or enhanced due diligence measures to take where there is a link to an overseas jurisdiction in a business relationship, you must consider your business’s risk assessment, as well as your assessment of the level of risk arising in that particular case.

Your assessment of the level of risk arising in a particular case must include consideration of the following geographical risk factors in Regulation 33(6)(c) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

The following can indicate, where identified by a credible source, that an overseas jurisdiction poses an increased level of risk:

• not having effective systems to counter money laundering or terrorist financing
• having a significant level of corruption, terrorism, or supply of illicit drugs
• subject to sanctions or embargoes issued by the EU or UN
• providing funding or support for terrorism
• having organisations designated under domestic sanctions legislation or if they are proscribed terrorist groups or organisations by the UK
• having terrorist organisations designated by the UK, EU, other countries or international organisations
• countries that have been assessed by organisations such as FATF, FATF-style regional bodies, World Bank, Organisation for Economic Co-operation and Development or the International Monetary Fund as not implementing measures to counter money laundering and terrorist financing that are consistent with the FATF recommendations

In addition to the geographical risk factors in Regulation 33(6)(c), HMRC considers there may be an increased geographical risk where the overseas jurisdiction:

• is not subject to anti money laundering or counter terrorist measures equivalent to the UK
• shares a border with a FATF Call for Action country or a country known to have high levels of crime or corruption, host terrorist groups, or be involved in proliferation-related activities, as money laundering, terrorist financing or proliferation financing often involves the movement of funds across borders
• has limited corporate registration requirements or limited beneficial ownership information requirements (for example, where there is no requirement to update ownership changes)
• allows unrestricted bearer share usage
• has laws aiding financial secrecy
• has high levels of tax evasion
• has high levels of capital flight
• is a conflict zone

Examples of sources which may help you to consider the risk of an overseas jurisdiction may include:

• guidance on the Joint Money Laundering Steering Group website, for example, Annex 4-1 of part 1, on the level of risk in other jurisdictions
• guidance and corruption index on the Transparency International website
• guidance on the Global Witness website
• internet searches
• news articles and media publications
• Basel AML index (the Basel index classifies countries with a score of 6.08 or higher to be high risk, but note that not all countries are included on the index).

You should take care to make sure the sources you consider are credible.

Where you consider there is a high risk in a particular case, you must apply enhanced due diligence measures before you form a business relationship.

If an overseas jurisdiction is also a FATF Call for Action country, you must apply enhanced due diligence measures before you form a business relationship.

 All persons and entities linked to the UK sanctions list, irrespective of which sanctions regime, should be treated as high-risk. You must not deal with those specifically listed – see sanctions section at end.

There has been a trend of Russian and Chinese ultra-high net worth individuals, and entities linked to them, investing and renting property in the UK, particularly in London. The rental of property with overseas funds can add complexity for LABs in identifying source of funds and how those funds enter the UK banking system, especially if funds originate from countries with currency export restrictions or are moved through money service businesses or Informal Value Transfer Systems (for example, Chinese underground banking).

Whilst you must make your own assessment of all jurisdictions based on the factors already mentioned, HMRC considers the countries listed within the NRA 2025 and the OFSI Property Threat Assessment to be higher risk.

Customers from jurisdictions that offer Citizenship by Investment (CBI)

CBI is the practice of granting citizenship status principally or solely in return for financial investment, without any requirement for a significant period of prior physical residency in the issuing jurisdiction. CBI schemes are often referred to as Golden Passports or Golden Visas. Some CBI schemes feature investment directly into property within the jurisdiction.

CBI programmes usually allow applicants to acquire citizenship quicker than through other, more traditional immigration channels. Some schemes also allow for citizenship to be passed down to dependants.

Illicit actors can exploit CBI programmes to facilitate a range of illicit activity including financial crimes, such as money laundering, corruption, fraud and tax evasion. These criminals may also abuse citizenship or residency status granted to them to enable further criminal activity or to evade law enforcement authorities.

CBI offers the opportunity to acquire a travel and identification document under a different nationality or name, which can be used to represent who the holder is in a novel way, or hide the original identity, particularly to avoid sanctions.

When assessing whether there is a high risk of money laundering, LABs must take account of the risk of CBI, in order to meet their obligations under regulation 33(6)(viii) of the regulations, in regards to enhanced due diligence measures. HMRC expects LABs to treat any customer who has a passport from a country that offers CBI as a higher risk where the place of birth is shown as being in a different jurisdiction to that of the issued passport.

Countries that offer CBI include, but are not limited to:

• Antigua and Barbuda
• Cyprus
• Dominica
• Grenada
• Jordan
• Malta
• Montenegro
• Saint Vincent and the Grenadines
• St. Lucia
• St. Kitts and Nevis
• Turkey
• United Arab Emirates
• Vanuatu

The customer is part of a complex or unusual corporate structure or is not transparent

A complex corporate structure refers to a firm or network of firms, where there is no immediate transparency of its ultimate ownership or control. For example, it could have several layers of indirect ownership, subsidiaries and divisions. It also may have multiple shareholders, corporate officers or persons with significant control.

Customers involved in property rentals that are part of an unusual or unnecessarily complex corporate structure may be a sign of an increased level of risk.

This could be a sign of attempts to make it more difficult for funds being channelled through the corporate structure to be traced, or for the ultimate beneficial owners of the business to be identified.

Tracing ownership and control is more difficult where corporate structures are complex or unusual. This is particularly the case where a corporate structure extends overseas or appears to be a shell company.

Private Investment Vehicles (PIV) and Special Purpose Vehicles (SPV) can also be used in property lettings to obscure beneficial ownership.

If your customer seeking to rent or let a property is a corporate vehicle and you cannot identify the beneficial owner, you should not proceed with the transaction until you are able to complete all necessary checks.

Customers that have a corporate structure based in The Isle of Man, the British Virgin Islands, Jersey, Guernsey, Gibraltar and the UAE should be treated as high risk, as companies and trusts from these countries commonly feature in predicate offences of money laundering.

 

The customer is a trust

The misuse of trusts for money laundering is a global problem. They are rarely used in isolation, but as part of complex structures layered with corporate structures.

Trusts are often used as the last step in the money laundering process after other laundering methods have been used to disguise the origin of funds. Trusts can provide the appearance of distance between the settlor and the assets, when in reality the settlor may maintain a level of control over the assets.

It is highly likely that criminals favour overseas trusts for money laundering in the UK. Trusts from the British Virgin Islands, Gibraltar, Guernsey, and Jersey have been identified frequently in UK law enforcement investigations, with trusts from USA, Liechtenstein, and Luxembourg less frequently appearing.

Therefore, any rental agreement involving a trust should be treated as higher risk.

The customer is a Real Estate Investment Trust (REIT)

A REIT is a vehicle that allows an investor to obtain broadly similar returns from their investment as they would have had they invested directly in property. The REIT is a limited company, or group of companies, that elects into the REIT regime. The REIT is required to invest mainly in property and to pay out 90% of the profits from its property rental business as measured for tax purposes as dividends to shareholders. The REIT is exempt from UK tax on the income and gains of its property rental business.

Customers that are a REIT must be treated as higher risk.

Requests to act for multiple companies which are connected or have common beneficial owners

Requests to facilitate a rental agreement for more than one firm, which share either a common beneficial owner or a common group of beneficial owners, can be a sign of attempts to obscure relationships between firms they own.

Transactions with little or no face-to-face interaction

Where you meet your customer face-to-face and you are able to review original physical documents before providing services, can give you greater assurance that the customer is who they say they are.

Where you provide services without meeting your customer face-to-face, this presents a risk that the customer is not who they say they are.

Fraudulent identity or business documents may be provided and may be more difficult to detect when supplied online or remotely.

Where you have regular, face-to-face contact with a customer, this presents a reduced level of risk than where you meet a customer face-to-face initially but there is no ongoing in-person interaction.

Whilst you may have assured yourself of the customer’s identity at the outset of the business relationship, there is a risk that the customer is employed to act for a criminal operation only to obtain the service without arousing suspicion. There is a risk that the ongoing business relationship is with an organised crime group, and this may not be detected where there is no further face-to-face interaction.

The customer is based in, or operates from, a virtual office

Virtual office addresses not connected to the customer or beneficial owners can facilitate anonymity. This anonymity is attractive to criminals looking to distance the criminal origin of funds. Where a customer is trading from a virtual office, especially in virtual offices based overseas, the risk of the customer facilitating money laundering, terrorist financing or proliferation financing may be increased.

Multiple property lets

Multiple lets of the same property in a short period of time, possibly with unexplained changes in value, may indicate the repeated use of a single property to launder money. This may be through successive transactions and efforts to obscure the identity of beneficial owners through repeated changes of tenant.

Similarly, a single customer letting out or renting multiple properties at the same time may indicate the customer is attempting to launder funds through different transactions.

Where a customer has multiple properties for rent and uses multiple financial institutions, this indicates higher risk. It would normally be seen that a customer involved with the letting of multiple properties would use the same accountant or financial institution. Where multiple intermediaries are involved for the same customer activity or transaction, it may be that they are using multiple intermediaries to conceal the full scale of their activity.

The rental price is not reflective of market value

Requests for the rental price to be unreasonably higher or lower than market price present a significantly higher risk, as they do not make economic sense.  This should be a red flag where no credible explanation is provided.

For example, a tenant may have organised to pay above the odds for the property. The funds to used could be the proceeds of crime, with the transaction providing the landlord an apparent legitimate source for those funds. You must clearly understand the reasons for your customer requesting an unusual rental value, or paying above market value, to mitigate the risk.

Transactions involving an intermediary

Intermediaries can pose a risk within LAB transactions, by placing distance between the customer and the LAB, which could be used for the purposes of providing anonymity.

Signs of an increased level of risk are:

• intermediaries based in overseas jurisdictions
• intermediaries who market themselves and their jurisdictions as facilitating anonymity and disguised asset ownership
• requests from intermediaries to provide services to their customers that can be used as part of a scheme to disguise income, assets, and ownership
• the number of intermediaries in a transaction seems excessive
• lack of clear rationale to explain why the customer has not approached you directly for the service

 

Rental involving an individual or organisation which could be a professional enabler

Whilst most businesses offering professional services take action to comply with professional and regulatory obligations, such as those under the regulations, some have been known to facilitate economic crime and other criminal offences, for example fraud, and drive serious and organised crime in the UK.

They may also enable criminality through negligence of their own compliance with professional and regulatory obligations. This is group is known collectively as professional enablers.

Professional services include, but are not limited to:

• accountancy services
• financial services
• trust or company services
• legal services
• estate agency businesses
• other letting agent businesses

You are providing professional services if you are carrying out relevant activity as an LAB.

There is a risk that you may deal with these ‘professional enablers’ through the course of your business and may be at an increased risk of exposure to money laundering, terrorist financing or proliferation financing risks when dealing with them. They may deliberately seek to exploit your services or any weaknesses in your professional and regulatory compliance procedures, to enable criminality. They may also expose you to these risks through neglect of their own compliance.

You should not assume that all professional service providers will take the same approach to their regulatory and professional obligations as you do. Professional enablers are known to be highly adaptable and are likely to have an understanding of your regulatory obligations. They may seek to exploit your trust that your peers in professional service sectors are meeting their own regulatory and professional obligations and are unlikely to be enabling criminality.

It can be difficult to identify professional enablers, but you can be vigilant to risks associated with their behaviours.

Signs of an increased level of risk are individuals or organisations who:

• undertake relevant activity under the regulations but do not appear to be anti-money laundering supervised
• in relation to their regulatory or professional obligations (including but not limited to the Money Laundering Regulations 2017):
• appear to take shortcuts or attempt to circumvent compliance procedures
• exhibit dishonest, improper or reckless behaviour
• appear negligent

 

Short-term rentals and holiday lets

Short term, high value lets, and holiday rentals can pose a risk of money laundering.

Short term rentals (less than a year) can be used by criminals to launder money quickly and help obscure and legitimise sources of funds by using fake tenants, or multiple different tenants working for the criminal.

High value holiday rentals can be used to spend the proceeds of crime and can be used by criminals for the prestige and high living standards associated with the criminal lifestyle. They can be exploited for storage of drugs, used for prostitution and human trafficking and can be used to obscure and hide where criminals are based.

Short term lets, including holiday lets, over a month but less than a year, should be carefully considered to see if they should be treated as higher risk.

A rental with no commercial purpose

If there is no obvious commercial purpose for a property rental, this is a sign of an increased level of risk.

This may include, for example, where a dormant, or non-trading business wants to let or rent out property.

Payment, refunds and source of funds risks

Indications of higher risk can include where a customer:

• changes their bank account during the course of a tenancy
• has a bank account based abroad or in a secrecy jurisdiction
• pays in cash or uses foreign currencies
• is from a country with restrictions on removing wealth from their county (such as capital controls or restricted currencies)

This also includes if a customer makes an unexpected or unrequested payment, over payment, or splits payments, particularly if a refund is then requested, as refunds can help disguise the origin of illicit funds.

Where the pattern of a rental agreement inexplicably changes, progresses at an unusual speed, when the customer changes or unknown parties are introduced at a late stage of rental, or when there are unexplained changes in financial arrangements, these indicate a higher risk.

Unusual sources of funds, for example, use of an unknown or overseas bank, or other obscure means of finance, also indicate a higher risk.

Where a customer makes payments to or from a bank account not associated with them, this could mean that a third party, apparently unconnected with your customer, is bearing the transaction costs, or receiving the funds. This could be a way of disguising who the beneficial owner is. Likewise, unusual involvement of third parties, cash gifts, or large payments from private funds and high-risk countries, increases the money laundering and terrorist financing risk.

Verifying the source of funds, and source of wealth are key in assessing and understanding the purpose and intended nature of the business relationship with the customer.

Source of funds must always be scrutinized by LABs as part of your ongoing monitoring obligations and are a key risk indicator for money laundering, terrorist financing and proliferation financing.

Source of funds and source of wealth checks are a key part of enhanced due diligence, which must be conducted when any of the high-risk indicators in this risk assessment are encountered.

 

Payments for LAB services

Cash is attractive to criminals as it provides anonymity and disguises audit trails. It is more difficult to trace the origin of funds where cash is used to pay for LAB services you provide.

Although LAB services may rarely be paid for in cash, the payment of cash directly into your business bank account from unknown sources can pose an increased risk of money laundering. Monitoring cash payments for services into your bank account to ensure they are from customers who you have authorised to make cash payments can help you to identify payments from unknown sources.

Similarly, you must ensure that the customer you have verified is the one making the payment for your services. Payments from third parties, in cash or otherwise, who are not linked to the rental agreement raise a red flag and should be treated as high risk.

The customer operates a cash-intensive business

Cash-intensive businesses can be attractive tools for criminals to launder illicit cash through, presenting it as legitimate funds.

When facilitating rental agreements involving customers with cash-intensive operations there is a risk that the rental may involve illicit funds, which may assist in hiding their origin. You must consider establishing that the source of funds for the transaction is consistent with your knowledge of the customer, the customer’s business and risk profile.

Where the volume of cash transacted through the customer’s business is not consistent with what you know about your customer’s business activity or does not make commercial sense, this poses an increased level of risk.

The following types of cash-intensive businesses have been known to launder money:

• vape shops
• hairdressers or barbers
• car washes
• tanning salons, nail bars and beauty parlours
• American candy shops

Rental agreements involving individuals connected to, or involved in, cash-intensive businesses should be treated as higher risk.

Joint ventures and reliance agreements

Working with another LAB as a joint venture, or to market the same rental property, can bring about additional risks. See ‘rental involving an individual or organisation which could be a professional enabler’ for more information on professional enablers. As such, care should be taken with any reliance agreement for the use of CDD documents.

Use of Digital Verification Service Providers or compliance companies

There are many third-party compliance companies and digital verification services (DVS) that operate with the property market to undertake CDD checks and provide other services, such as creating risk assessments on behalf of LABs. Use of a third-party can offer benefits but may also carry additional compliance risks.

The level of service, and standard of the product and service provided will depend on which third-party you use, and which level of service you pay for.

It is important to note that you, as the LAB, are responsible ensuring you comply with all of your obligations under the regulations. Any service, product or report the third-party provides must be examined by you, and you need to decide what, if any, further action you need to take to ensure you meet your obligations under the regulations.

Care must be undertaken when using third parties, as any breach of the regulations may result in sanctions, including financial penalties or criminal charges, on you or your business, as the supervised entity: use of a third party does not absolve you of your responsibility for compliance.

Digital identity services which are certified against the trust framework and on the DVS register are a reliable and independent source of information, with an appropriate level of anti-impersonation assurance. Entities are able to fulfil their obligations under regulation 28 by verifying a customer who is a natural person’s identity using certified and registered digital identity services. 

You should ensure that any DVS that you use is certified and on the DVS register.

Digital verification services which are not certified and therefore not on the DVS register cannot reliably be deemed suitable for identity verification in compliance with the regulations.

HM Treasury have produced guidance on DVS that must be followed if using a DVS service for ID verification.

The DVS register can be found here.

Terrorist financing

LABs are assessed by the NRA 2025 as low risk for use for terrorist financing purposes. However, the sector remains more attractive for money laundering which could translate to vulnerability to terrorist financing in the future. It is important for LABs to continue to put in place strong controls for preventing terrorist financing.

Terrorist financing risk indicators

The terrorist financing risk indicators set out in this risk assessment must be considered higher risk but should be read and assessed in conjunction with the other risk indicators in this guidance.

Customer links to proscribed organisations

Under the Terrorism Act 2000, the Home Secretary may proscribe an organisation if they believe it is concerned in terrorism, and it is proportionate to do. For the purposes of the act, this means that the organisation:

• commits or participates in acts of terrorism
• prepares for terrorism
• promotes or encourages terrorism (including the unlawful glorification of terrorism)
• is otherwise concerned in terrorism

Any rental agreement involving proscribed organisations, or individuals or businesses linked to them, should:

• be treated as high risk
• not be continued

A Suspicious Activity Report on the NCA website should be filed as appropriate.

If you carry out business with a customer linked to a proscribed organisation you may be committing a criminal offence. Failing to report suspicious activity linked to terrorist financing is also a criminal offence.

Landlords may have purchased a property, or tenants may be renting with funds tainted by terrorist financing, including through funds generated from activity involving payments to terrorist organisations, such as protection money for operating in areas controlled by terrorist groups.

The Home Office publishes a list of all proscribed terrorist groups and organisations.

Customers sanctioned by the UK for terrorist activity

There is a risk of terrorist financing in any property transaction linked to a regime sanctioned for terrorism, including any:

• sanctioned entity
• government
• government owned entities
• PEPs

You must not deal with a UK-sanctioned individual or entity.  Any transactions to persons linked to sanctioned persons should be treated as high risk.

Furthermore, there are risks that any customer may be receiving proceeds from a company operating in a high-risk area and paying protection money to a terrorist group to operate in the area or is paying a supplier connected to a terrorist group. You should therefore risk assess your clients carefully and treat such customers as high risk.

Offshore ownership, intermediary jurisdictions and countries with a high geographical risk of terrorism

For more information, see:

• ‘the customer is from or linked to a FATF Call for Action country’
• ‘the customer is from or linked to an overseas jurisdiction’

Business customers who are established or linked to businesses with an offshore presence in a country with a high geographical risk of terrorism should be treated as higher risk.

Some intermediary jurisdictions have historically offered greater privacy through their legal and financial systems, as well as different tax regimes to the UK. These can be popular and exploited for the purpose of financing terrorism.

Customers linked to countries with a high geographical risk of terrorism should be treated as higher risk.

Foreign policy sanctions, including proliferation financing sanctions regimes

Proliferation sanctions place financial and trade restrictions on certain countries.  For the purposes of the regulations, financial sanctions apply to countries sanctioned by the UN to prevent their development of chemical, bilogical, radiological and nuclear (CBRN) weapons of mass destruction (WMD) and delivery systems.  Financial sanctions are restrictions put in place to achieve a specific foreign policy or national security objectives and can limit the provision of certain financial services and/or restrict access to financial markets, funds and economic resources.

UK asset freezes are in place against both Iran and North Korea, meaning it is against the law to: 

• deal with the frozen funds or economic resources, belonging to or owned, held or controlled by a designated person (an individual or entity on the UK Sanctions List (The UK Sanctions List - GOV.UK) or to a person who is owned or controlled directly or indirectly by the designated person
• make funds or economic resources available, directly or indirectly, to, or for the benefit of, a designated person or to a person who is owned or controlled directly or indirectly by the designated person
• engage in actions that, directly or indirectly, circumvent the financial sanctions prohibitions 

More details on UK sanctions can be found here Starter guide to UK sanctions - GOV.UK and detailed guidance on financial sanctions here: UK financial sanctions general guidance - GOV.UK.

There is an increased risk of proliferation financing in any transaction or business relationship linked to a regime sanctioned for proliferation financing.  These transactions and customers should be treated as high risk.  Regimes seeking to evade UN sanctions and develop WMD and delivery systems take extensive steps to obscure the true nature of their transactions, including using neighbouring countries from which funds or material will be sent to the sanctioned country.  Firms should be aware of the increased risk around countries and geographical areas bordering sanctioned countries. 

Broader proliferation financing & sanctions risks

Proliferation financing (PF) is defined as providing funds or financial services for use in the manufacture, acquisition, development, transfer and shipment of chemical, biological, radiological or nuclear weapons (also known as weapons of mass destruction) and their delivery systems. The measures exist to prevent the build-up of weapons of mass destruction by certain regimes.

Whilst the specific PF obligations in the Regulations relate specifically to proliferation financing risks in relation to entities subject to UN sanctions for their proliferation activity (Iran and DPRK), all UK individuals and businesses are required to comply with UK foreign policy sanctions.  The UK proliferation financing sanctions regime highlights designated people and businesses sanctioned for proliferation financing purposes. It includes specific sanctions against related to chemical and nuclear weapons programmes.

Current UK-sanctioned businesses, individuals and PF countries include:

• Iran
• North Korea (DPRK)
• Russia
• Syria

The UK proliferation financing sanctions are regularly updated, so it is important to be aware of any changes and additions by checking the UK sanction list.

It is important that you screen your customers for sanctions purposes and consider the PF risks associated with your clients and transactions.

 

Proliferation financing risk indicators

The proliferation financing risk indicators set out in this risk assessment should be considered higher risk but should be read and assessed in conjunction with the other risk indicators in this guidance.

Customers linked to the governments of proliferation financing sanctioned regimes

There is a risk of proliferation financing in any rental agreement linked to a regime sanctioned for proliferation financing, including any:

• sanctioned entity
• government
• government owned entities
• PEPs

See ‘politically exposed persons’ for more information.

These transactions should be treated as high risk.

Property being used to manufacture dual use goods

There is a risk of commercial property being utilised for the manufacturing of dual use items, such as:

• heavy machinery
• carbon fire
• vacuum pumps
• electronic components and chemicals (see the national risk assessment of proliferation financing for more information on dual use items)

As such, any business or individual involved in a commercial property rental for a manufacturing premises linked to dual use items would be higher risk, especially where the business or individual is also linked to regimes sanctioned for proliferation financing.

Use of obscure company structures, trusts and intermediary jurisdictions would also indicate a higher risk in a commercial property transaction for a manufacturing premises.