No summer break for AML enforcements as the SRA issue huge fines
The Solicitors Regulation Authority (SRA) has made it clear – AML enforcement doesn’t take holidays! In July alone, the SRA …
Insight
Just last year, HMRC fined 254 estate agents a total of over £1.6m for failing to register for AML supervision. While UK letting agents have long been expected to manage AML compliance, with technology evolving, financial crime becoming more sophisticated and significant penalties like this being doled out, it’s more crucial than ever to ensure you’re staying ahead of regulatory changes.
One significant upcoming change we’re seeing a lot about lately is the introduction of new financial sanctions obligations, effective from May 14, 2025.
Here, we explore the new requirements and share our tips for helping your agency prepare for the upcoming changes.
Understanding the new obligations
From May 2025, letting agents will be classified as “relevant firms” under financial sanctions regulations. This means they must adhere to strict reporting and compliance requirements, similar to those already in place for other financial institutions. The key obligations include:
- Mandatory screening: Letting agents must screen all potential tenants, landlords, and other relevant parties against government sanctions lists before entering contracts or accepting payments. This must be conducted regularly, as sanctions lists are frequently updated.
- Enhanced due diligence: Agents must verify the identity of all parties involved by confirming names, addresses, and other personal details. If a match is found on a sanctions list, appropriate action must be taken.
- Reporting obligations: Agencies must report to the Office of Financial Sanctions Implementation (OFSI) immediately if they know or reasonably suspect that a person is designated under financial sanctions, has breached a prohibition, or failed to comply with an obligation under sanctions regulations.
Consequences of non-compliance
Failure to comply with these new regulations can result in substantial fines and imprisonment for up to seven years. Additionally, non-compliance can lead to reputational damage and increased regulatory scrutiny, which can severely impact your business and even lead to permanent closure.
Steps to ensure compliance
With the May 2025 deadline fast approaching, it’s crucial for letting agents to take proactive steps to ensure compliance. This includes:
- Regularly reviewing government databases: Use Veriphy online checks to verify parties involved in transactions.
- Providing staff training: Ensure all employees are up to date on the new regulations and best practices for compliance with AML training.
- Implementing robust compliance procedures: Establish a system for consistent screening, and reporting, as well as record-keeping through AML policy documents..
- Stay informed: Keep abreast of any updates or changes to the regulations by regularly checking OFSI’s guidance and attending relevant webinars and training sessions.
The introduction of these new financial sanctions obligations marks a significant shift for the letting industry. By taking proactive steps now, you can protect your business, avoid penalties, and contribute to the fight against financial crime. Don’t wait—ensure your compliance framework is fully in place before May 14, 2025.
Need a hand? Veriphy offers a range of compliance solutions for estate agents to keep you on the right side of the regulators, which works hand in hand with our upcoming online sanctions training. Want to find out more? Get in touch today.
