What is a sanctions check?
A sanctions check is a screening process used to determine whether a person or organisation appears on a government or international sanctions list.
These lists may include individuals or entities linked to:
- Money laundering
- Terrorist financing
- Human rights violations
- Organised crime
- Political corruption and other national security threats
Sanctions checks are intended to prevent individuals or businesses involved in criminal or high-risk activity from entering into contracts — including tenancy agreements.
If a person or company is identified on the UK sanctions list, or if there is reasonable cause to suspect they are, the agent is legally required to freeze any property or assets and report the matter to OFSI immediately.
Sanctions checks vs PEPs: What’s the difference?
Although Politically Exposed Persons (PEPs) are often flagged during AML checks, PEPs and sanctions are not the same:
| Sanctions check | PEP check |
|---|---|
| Looks for individuals or organisations on official sanctions lists (like OFSI, UN, EU, OAFC) | Identifies politically exposed persons – people in high public positions or their family / associates |
| Focuses on legal restrictions and national security | Focuses on risk if corruption, bribery, or money laundering |
| Required for letting agents from May 2025 | Often included as part of broader AML/KYC checks |
| Illegal to deal with sanctioned individuals | Higher AML risk but not illegal to deal with |
| Requires asset freezing and reporting | Requires enhanced due diligence, not reporting |
Some PEPs do appear on sanctions lists, especially if involved in illicit activity — which is why many providers screen for both together.
Why are letting agents affected now?
Letting agents are now defined as “relevant firms” under the UK’s updated financial sanctions regulations. This classification means they are subject to the same duties as estate agents, law firms and financial institutions in terms of identifying and reporting designated persons.
This change brings letting agents fully into the sanctions enforcement framework. Failure to comply can lead to serious consequences, including civil penalties and potential criminal prosecution.
What are agents required to do?
From 14 May 2025, letting agents will be legally required to:
- Check tenants and landlords against the UK sanctions list
- Freeze any assets or property held for a sanctioned individual/entity
- Report any matches or suspicions to the OFSI immediately
- Keep records of checks and any actions taken
Impact on day-to-day lettings
For agents already registered for AML supervision, sanctions checks may already be included in the customer onboarding process. However, the updated rules apply to all letting agents — not just those exceeding the AML income threshold.
This means sanctions screening must now form part of the standard Know Your Customer (KYC) process for every landlord and tenant, regardless of rent levels or registration status.
It’s important to let landlords and tenants know that agents are now legally required to confirm their identity and check whether they appear on the UK’s financial sanctions list. This may occasionally cause small delays when securing tenants, but it’s a necessary step to remain compliant.
Note: The AML supervision threshold stays the same — agents don’t need to register for AML supervision unlessthey handle monthly rents over €10,000 (or Sterling equivalent).
How to carry out a sanctions check
There are several ways to check if someone is on the sanctions list:
- The UK Sanctions List published by the Foreign, Commonwealth and Development Office
- The OFSI Consolidated List of Financial Sanctions Targets
- Commercial Sanctions tools, or AML tools which include automatic sanctions screening
- Integrated AML platforms that bundle AML and sanctions into one step
If using the official lists manually, you’ll need to search names carefully and document your results.
What should agents do now?
Letting agents should ensure their teams are prepared for the upcoming changes:
- Review and update AML and compliance policies
- Integrate sanctions checks into the landlord and tenant onboarding process
- Implement a reliable tool to automate and monitor results
- Provide training for staff on how to identify red flags and report to OFSI
- Maintain accurate records of checks and any actions taken
For further information on this subject read the government’s General Guidance to UK Sanctions.
