HMRC AML supervision — which letting agents must register
- The 2017 MLRs threshold: letting agents are required to register with HMRC for AML supervision where they carry out letting agency activity — check current HMRC guidance for the applicable threshold as of June 2026
- Registration requirement: agents must apply via the HMRC online portal before carrying out regulated activity — civil penalties and criminal prosecution available for unregistered operation
- AML policies required: registered agents must appoint an MLRO, conduct written risk assessments, implement CDD and EDD procedures, train staff, and retain records for 5 years
- Private self-managing landlords: not currently within the regulated sector for AML purposes — but remain subject to POCA 2002
Customer due diligence (CDD) — what agents must do
- Landlord CDD: verify landlord identity (photo ID + proof of address); company landlords — verify company registration and beneficial owners (over 25% shareholding); PEP and sanctions screening
- Tenant CDD: identity verification; source of funds enquiry where deposit is disproportionate to stated income; PEP and sanctions screening
- Enhanced due diligence (EDD): required for higher-risk customers (non-UK residents, unusual transactions, cash proposed, high-value properties) — additional verification and ongoing monitoring
- Record-keeping: all CDD records and transaction records must be retained for 5 years from end of the business relationship
POCA 2002 offences — liability for landlords
- Section 327 (concealing): concealing, disguising, converting, or transferring criminal property — e.g. accepting rent knowing it derives from criminal activity
- Section 328 (arrangements): entering an arrangement knowing or suspecting it facilitates the acquisition or use of criminal property
- Section 329 (acquisition): acquiring, using, or possessing criminal property — e.g. accepting rent paid from drug dealing proceeds
- Knowledge or suspicion test: offences require knowledge or suspicion that property is criminal — landlord with no basis for suspicion does not commit an offence; red flags (unexplained cash, property alterations, police information) increase liability risk
- Tipping-off (s.333A POCA): warning a tenant before making or after making a SAR — in a way likely to prejudice the investigation — is a separate criminal offence
Cannabis farms — call police first
Where a cannabis farm is suspected, call the police immediately. Do not enter without police attendance (risk of booby-traps). Do not warn the tenant. Notify your insurer. Take legal advice on SAR obligations before accepting any further rent from the property.
Suspicious Activity Reports (SARs) and the consent defence
- Regulated sector (letting agents): legally required to make a SAR to the NCA via the online portal where they know or suspect money laundering
- Private landlords: not legally required to make a SAR but may voluntarily do so — making a SAR and receiving NCA consent provides a defence to POCA offences (consent to deal with the property during the NCA's review period)
- No tipping-off: once a SAR has been made (or is about to be made), do not warn the person concerned — separate criminal offence under s.333A POCA
- After police attendance at a cannabis farm: commission structural, electrical, and environmental survey before any remediation; check insurance policy response; do not re-let until fully remediated