Call of the month: New Financial Sanction rules - what do I need to do?
This month, we were able to assist one of our members who called asking about the new financial sanctions regulations for letting agents.
Our member, who is a letting agent, was aware of the changes that were about to come in to force and wanted to make sure they were up to date in time to meet their obligations – including whether they needed to carry out checks on their existing landlords and tenants.
What are financial sanctions?
Essentially financial sanctions are placed upon individuals – known as ‘designated persons’ by the government, usually for purposes of national security. Individuals subject to financial sanctions will appear on the OFSI financial sanctions list.
How does this affect letting agents?
Under the Financial Sanctions Regulations, certain businesses – referred to as ‘relevant firms’ are subject to reporting obligations – and from 14th May these rules were extended to include letting agents.
This means that if agents know or suspect a ‘designated person’ is in breach of the sanctions, they will need to report it to the Office of Financial Sanctions Implementation (OFSI). You can read about the rules in more detail here.
What was the advice?
Our adviser told the member that they should be checking all prospective landlords and tenants that they deal with using the OFSI search tool, or through a referencing provider.
They told the caller landlords should be checked the moment they give instruction to carry out letting agency work, and tenants should be checked once it becomes clear there is an intent to enter into a tenancy with a landlord.
They also advised the member that however they choose to perform the check, they should be sure to keep evidence.
After signposting them to our guidance page, the adviser discussed the question of whether or not they should also check existing tenants and landlords.
Whilst it isn’t a requirement under the new rules and wouldn’t form part of their reporting obligations, they were advised it might be worth checking, for peace of mind and to minimise the chance of any issues further down the line.
More information
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NRLA Tenant Referencing offers a tenant referencing service, and for an extra £3 can perform an anti-money laundering and financial sanctions background check on any prospective tenants.
