We asked the experts at FCS Compliance every question you may need to know the answer to regarding financial sanctions legislation
Following our webinar with FCS Compliance around the new sanctions legislation, we've compiled their expert answers to some of the most important questions around the new obligations set by the Office of Financial Sanctions Implementation (OFSI).
Who needs to be checked for sanctions?
Guarantors, permitted occupiers and persons gifting funds will need to be checked against the sanctions database. Beneficial owners of companies both UK and overseas i.e. anyone with more than 50% shares or control of the company must also be checked. Short lets of more than one calendar month are included in the new reporting obligations.
When do checks need to be carried out?
There is no requirement to complete sanctions checks retrospectively from 14th May 2025. However, letting agents must ensure that they do not breach financial sanctions prohibitions in the legislation. An activity like rent review on an existing tenancy would not carry reporting requirements. The focus is on the actions leading up to the transaction of letting land and the conclusion of the agreement for the letting of land.
What do you do when you get a match?
You should provide OFSI with any information you hold about the designated person by which they can be identified. If the designated person is a customer, you must also inform OFSI of the nature and amount or quantity of any funds or economic resources held on behalf of the customer, at the time this knowledge or suspicion arose.
Your obligation to report to OFSI is in addition to any other sanctions reporting obligations you may have. These could include reporting required by your regulator (if you have one), or submitting Suspicious Activity Reports (SARs) to the NCA under the Proceeds of Crime Act 2002. In some cases, you may have specific obligations to report under section 19 of the Terrorism Act 2000. Please note that reporting to your regulator or submitting a SAR does not meet your reporting obligations under financial sanctions. If you have information to report regarding financial sanctions, this must be emailed to OFSI.
How do you complete a sanctions check?
Sanctions checks can be completed manually or by using a digital platform of your choice. To check the sanctions lists manually you will need to use both of:
All manual search results can be saved using a screenshot to prove that these have been completed with no matches if that is the case.
Who do sanctions checks apply to?
Sanctions checks apply to all lets over one calendar month regardless of the rental value, this includes commercial and residential lets. Anti money laundering checks only apply to lettings over the €10k threshold, these are distinct from sanctions checks for under threshold lettings.
Do you need to monitor tenants and landlords throughout the tenancy?
There is no requirement to complete ongoing monitoring for under threshold lettings from 14th May 2025. However, letting agents must ensure that they do not breach financial sanctions prohibitions in the legislation.
Is there a legal obligation to check everyone?
As a letting agent, you are deemed to be a relevant firm, in which case, all tenants and landlords are subject to sanctions checks if the rent is for more than one calendar month, regardless of rental value. We would recommend having a policy and risk assessment for your business which clearly states your procedures for dealing with the new obligations.
If you have a question which hasn't been answered...
If you still have any queries around this topic, they may require specialist input.
Please reach out to FCS Compliance by emailing them at info@fcscompliance.co.uk for further support.