Agents already conduct sanctions checks and customer due diligence on all clients in both sales and lettings.
Estate agents must verify the identity of all parties involved, including beneficial owners, while letting agents are expected to check landlords and tenants against the sanctions list regularly.
However, improving clarity, consistency, and access to information is essential to ensure sanctions are enforced effectively without placing disproportionate burdens on property professionals.
What is the ownership and control test?
The test is used in UK financial sanctions regulations to determine whether a sanctioned individual — known as a Designated Person (DP) — may still be involved in a transaction, indirectly, even if they are not the named buyer or tenant. It considers both formal ownership and the possibility that a DP could exert influence or control through other means, such as companies, trusts, or proxies.
Propertymark and others have raised concerns that the “control” element is too ambiguous, relying on assumptions about potential influence rather than clear, provable evidence.
This is particularly relevant in the property sector, where high-value assets and complex ownership structures can be used to conceal involvement by sanctioned individuals.
Impact on agents and compliance
The current system creates a significant administrative burden for agents, who are expected to assess risks without clear evidence thresholds or consistent guidance.
In practice, most agents rely heavily on checking the UK Sanctions List. While this is effective for identifying direct matches, it can give a false sense of security if a DP is acting through intermediaries.
Assessing a person’s ability to exert control, especially across different legal systems and political environments, is often unrealistic for property professionals.
The need to assess indirect control typically arises only in higher-risk scenarios, such as transactions involving complex corporate structures or trusts, cases where a proxy appears to be acting on behalf of another party, transactions linked to high-risk locations or politically exposed individuals, and high-value property deals. Even in these cases, agents often rely on risk-based judgments rather than definitive proof.
Key challenges raised by Propertymark
Several structural issues make the current approach difficult for agents to apply effectively.
Identifying hidden control is often beyond agents’ expertise. Determining whether a sanctioned individual is exerting indirect control can require a detailed analysis of corporate structures and financial arrangements. Property agents typically do not have the same specialist skills as legal or financial professionals to carry out this level of investigation.
Complex ownership structures obscure involvement. DPs may use trusts, shell companies, or proxies to hide their identity. These arrangements can make it extremely difficult to establish who ultimately benefits from a transaction.
Limited transparency, particularly overseas. Where companies are based outside the UK, there is often no reliable or up-to-date ownership data available, making it harder to assess links to sanctioned individuals.
Transactions often stop before full identification. In many cases, anti-money laundering checks flag a transaction as high risk before a DP is definitively identified. Agents will then halt the transaction and submit a Suspicious Activity Report, meaning the individual’s involvement may never be confirmed.
Recommendations for OFSI
Propertymark is not calling for the removal of sanctions checks, but for clearer, more practical guidance and better support for agents.
Key suggestions include:
- closer collaboration between regulators, AML supervisors and industry bodies.
- improved information sharing to avoid gaps between AML and sanctions reporting.
- access to intelligence on how sanctioned individuals operate, including common methods used to hide ownership.
- development of best practice guidance through industry workshops and engagement.
There is also a need for a more joined-up approach to financial crime regulation to ensure that suspicious activity is not missed when transactions are halted early under AML rules.
