Positive Property Management - Anti Money Laundering Procedures
Dated 25 October 2021. Revised 19 May 2025.
OBLIGATIONS
Anti-money laundering
Since January 2019, letting agents have been required to comply with anti-money laundering (AML). As part of the 5th Money Laundering Directive, letting agencies are required to register and carry out checks if they let land or property for a month or more at a rent of €10,000 (equivalent to approximately £8,500) or above. The relatively high threshold has been set as it is believed properties and land above this value are considered attractive to money launderers. Alongside compulsory Right to Rent checks for all transactions, agents are required to carry out customer due diligence for transactions above the threshold. The rules also require affected agents to register with HMRC by May 2021, while also paying consideration to Politically Exposed Persons.
Positive Property Management does not buy or sell property and none of the rents are above €10,000 per month, therefore Positive Property Management does not need to register with HMRC unless this changes.
MLRO
Laura Ridge (Director and sole employee) is the Money Laundering Reporting Officer for Positive Property Management. The MLRO will decide if actions are required when suspicions are aroused.
Confirming Identities and Ownership
Before working for a new landlord, the following must be requested and recorded:
Before signing a tenancy agreement with new tenants, the following must be undertaken:
Financial Sanctions
The MRLO will consider if the Positive Property Management might be engaging with a person or entity who is under financial sanctions and respond accordingly (see section at the end of this document on Financial Sanctions).
Training
The MRLO must be trained to recognise suspected money laundering situations and to understand the companies obligations under the regulations. Training must not be a one off activity but must be undertaken regularly. Top up training should be given and recorded. Training records can be found at the end of this document.
Holding records
The MRLO will hold records for five years including identity records, proof of address, proof of ownership etc.
Control Measures
The MRLO will review regulations and procedures regularly and when there is an update. Stay alert and be aware of situations where money laundering may occur. For example, be suspicious if a potential tenant pays rent and a deposit and then changes their mind requiring the funds to be returned. Request that rents and deposits are paid via bank transfers (rather than in cash) so there is a record of where the money has come from. If a tenant insists on paying in cash then, check what further steps should be taken to comply with AML requirements.
**********************************************************************************
FINANCIAL SANCTIONS
Under the Sanctions and Anti-Money Laundering Act 2018, the UK Government introduced a new regime of issuing financial sanctions following the UK’s departure from the European Union. Under the Act, businesses specified in the Act have to report to the OFSI if they suspect they are engaging with a client who is under financial sanctions.
Since 14 May 2025, letting agents are required to report to OFSI in the following circumstances:
The obligation only applies if the agent obtained the information during the course of carrying out their business. Designated persons A designated person is an individual or entity that is listed under UK Financial Sanctions. The full list and guidance on searching the list can be found on the OFSI Website: https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets
NB: Financial sanctions apply to those who are owned or controlled by a designated person. For example, if a foreign government is under financial sanctions, then financial sanctions also apply to all those who are employed by the foreign government as well as any firms that are ran by that government.
Russian sanctions All agents must also report to OFSI if a client is, is controlled by (either directly or indirectly) or is acting on behalf of one of the following entities:
• The Central Bank of the Russian Federation .
• The National Wealth Fund of the Russian Federation.
• The Ministry of Finance of the Russian Federation. The full list and guidance on searching the list of those under Russian sanctions can also be found on the OFSI Website: https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of targets
Who must be checked?
While estate agents are required to check both the buyer and the seller to see if they are designated persons, for letting agents who have potentially hundreds of clients, it is not possible to constantly check all existing and prospective tenants and landlords. OFSI requires letting agents to check landlords in response to instructions received from the landlord and if they become suspicious of the landlord during the carrying out of any works following the instructions. When receiving instructions from the landlord, letting agents are only expected to carry out checks on tenants when the landlord and tenant are in the process of signing the tenancy agreement. This means letting agents are not expected to check all tenants, only those who are expected to live at the property. When taking instructions from tenants to seek potential property, letting agents are only expected to check both the tenant and the landlord when the both parties are in the course of signing a tenancy agreement. 2 of 5 propertymark.co.uk For existing tenants and landlords, this means letting agents are not required to check all landlords and tenants, only during the course of renewing a tenancy agreement or when new tenants are moving into the property.
Eligibility
From 14 May 2025, this will apply to all firms that carry out estate agency work, high value dealers and all firms that carry out letting agency work.
Things to think about
In the vast majority of situations, clients will not be under financial sanctions. However, there are some indicators that someone under financial sanctions may be looking to purchase or has already purchased property. While none of these factions automatically indicate a designated person is involved in a property, agents should consider these factors when carrying out customer due diligence:
High-value properties - Typically, individuals under financial sanctions are more likely to purchase high-value property, especially in large cities. The Russian Federation and designated persons connected with the Russian Federation have invested a considerable amount in London property, so agents in London should take additional care in ensuring that they identify if a designated person is involved in a transaction.
Use of third-parties - People under financial sanctions are unlikely to purchase property directly, as they look to minimise the chances of being identified. When engaging with a third-party, it is essential to identify the beneficial owner, who is the individual or organisation who will be in ultimate control of the property. If an agent has identified that the person involved in a transaction is not who they are directly engaging with during the transaction, it is essential to identify the beneficial owner who could be a designated person. NB: For individuals, the beneficial owner is the person who has instructed and paid another person or company to carry out or organise the purchase or renting of the property on their behalf.
For a corporate body, the beneficial owner is anyone who owns or controls more than 25% shares or voting rights. Use of complex company structures Using a complicated company structure or trust hides the true ownership of the beneficial owner of the property. Currently, it is not illegal for trust or company to purchase property, even though designated persons or criminals can use a company structure or trust to hide their identity.
Recently Companies House have taken steps to ensure greater transparency over the ownership of these companies to identify the directors and beneficial owners, making it easier to obtain information about these trusts. Agents are recommended to work with these companies or trusts to obtain information on the directors as part of their anti-money laundering prevention measures. NB: If it is difficult to obtain any information on the company, either from the directors or through other means, then this could be evidence of money laundering. Additionally, it could mean that the company is owned, or a director is a designated person. 3 of 5 propertymark.co.uk
Steps to take
It is important to note that some of the steps agents are expected to take to verify the identity of individuals involved in a property transaction are the same steps to verify potential money laundering risks.
*While all letting agents are expected to report to OFSI if a property transaction involves a designated person, they are not required to register with HMRC for money laundering if they do not rent any property with a monthly rent that is the equivalent of 10,000 Euros.
* NB: Propertymark does however recommend that agents submit a Suspicious Activity Report to HMRC if their customer due diligence uncovers that there could be a money laundering risk involved with the property transaction.
Conducting Customer Due Diligence (CDD)
It is vitally important to carry out customer due diligence on all parties involved in the property transaction, this includes both the landlord and tenant for a rental property and both the vendor and buyer during a property sale. Agents must have procedures in place, either carried out internally or by a third-party organisation, that will enable the agent to identify the customer and beneficial owner(s). If the beneficial owner is not an individual but a company or a trust, the agent must take measures to understand the ownership of the organisation and its control structure. Once the identity of ultimate beneficiary of the property transaction is established, agents must review the OFSI Website (https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of targets) to confirm whether or not they are under financial or Russian sanctions.
Reporting to OFSI
Agents must report to OFSI as soon as practicable if they believe their client is a designated person or that a designated person is in breach or attempting to breach their sanctions. If the designated person is a customer of the agent, the agent must provide a summary of the funds or economic resources that the agent is holding for that customer. OFSI requires that any reporting obligations be sent to OFSI using the following form: Compliance_Reporting_Form.odt OFSI requires that agents fill in the following form for reporting Russian assets: Immobilised_Assets_Reporting_Document.ods
Once the required form has been filled in, agents must email ofsi@hmtreasury.gov.uk. It is recommended that agents include if the email is about a suspected designated person or frozen assets in the subject line of the email. Within the email, agents are also recommended to include:
• the information or evidence in which the knowledge or suspicion that the individual is under financial sanctions is based.
• any information that the agent holds on the designated person by which they can be identified.
The lettings helpline is available to members with individual queries: propertymark.co.uk/members.html
Enforcement
OFSI monitors compliance with financial sanctions and assesses suspected breaches. Any relevant business that fails to report a suspected breach commits a criminal offence and will be liable to maximum three-month prison sentence and or a fine. The size of the fine depends on the scale of the breach and the actions taken by the agent to identify the client.
Agents must report to OFSI as soon as practicable if they believe their client is a designated person or that a designated person is in breach or attempting to breach their sanctions. If the designated person is a customer of the agent, the agent must provide a summary of the funds or economic resources that the agent is holding for that customer.
**********************************************************************************
TRAINING RECORD
On 25 October 2021 the following training activities were undertaken by Laura Ridge
Outcome of training – understanding of the current requirements of the AML as they apply to Positive Property Management.
On 24 April 2024 the following training activities were undertaken by Laura Ridge
Outcome of training – Checked that AML procedures were still in line with requirements. Considered the use of ‘Smart Compliance’ which is AML solution which offers a guarantee for HMRC compliance. Decided this wasn’t necessary for a lettings business of this size.
On 14 May 2025 the following training activities were undertaken by Laura Ridge
Outcome of training – Updated the AML procedures to account for the new obligations on letting agents.
