Anti-Money Laundering UK 2026 — What Landlords and Letting Agents Must Know

Which letting agents must register with HMRC — the AML threshold

The 2017 MLRs brought letting agents into the AML supervised sector, but with a significant threshold restriction:

• The €10,000 monthly rent threshold: Letting agents must register with HMRC for AML supervision only if they carry out 'letting agency activity' in relation to a property where the monthly rent is equivalent to €10,000 or more. As of 2026, with the exchange rate approximately £1 = €1.17, this means monthly rents of approximately £8,500 or above for a single letting. Most residential letting agents fall below this threshold for individual lettings — but agents with a portfolio of high-value residential properties, or agents managing commercial premises alongside residential, may be caught
• Amendment from January 2020 — all lettings: The EU's 5th Anti-Money Laundering Directive (5AMLD), implemented in the UK in January 2020, extended the AML supervision requirement to all letting agents carrying out rental transactions at any value — the €10,000 threshold was removed for new registrations from January 2020. HMRC subsequently clarified the implementation — but as at June 2026, HMRC's public guidance continues to reference the €10,000 threshold as the entry point for registration. Agents should check the current HMRC guidance and register if in doubt, as the penalties for operating without registration are significant
• Registration requirement and penalty for non-registration: Letting agents required to register must apply to HMRC via the online portal before carrying out regulated activity. HMRC issues registration certificates and conducts supervisory visits. Operating without registration is a criminal offence under the 2017 MLRs — civil penalties (fines) and criminal prosecution are available to HMRC. Fines of £800 per month per unregistered business have been issued in enforcement sweeps
• What registration requires — AML policies and procedures: Registered letting agents must: appoint a Money Laundering Reporting Officer (MLRO, sometimes called a Nominated Officer); conduct a written business-wide AML risk assessment; implement written AML policies and procedures (customer due diligence, enhanced due diligence for high-risk customers, ongoing monitoring, SAR reporting); train all relevant staff; and keep records of all customer due diligence and transactions for 5 years. HMRC supervisory visits assess whether these systems are in place and are followed
• Private landlords — self-managing landlords are not supervised: A private individual who manages their own property without using a letting agent is not currently a 'letting agent' under the 2017 MLRs and is not required to register with HMRC for AML supervision. However, private landlords remain subject to POCA 2002 and may be liable for POCA offences if they handle the proceeds of criminal conduct

Customer due diligence (CDD) — what letting agents must do for landlords and tenants

Registered letting agents must conduct customer due diligence on their clients — both landlords and tenants:

• Standard CDD — landlord clients: For landlord clients, letting agents must: verify the landlord's identity (passport or driving licence + proof of address); where the landlord is a company, verify the company registration and the identity of all beneficial owners (persons with more than 25% shareholding or control); identify the ultimate beneficial owner; and assess whether the landlord or any associated person is a Politically Exposed Person (PEP) or subject to financial sanctions
• Standard CDD — tenant applicants: Agents must also conduct CDD on prospective tenants, including: identity verification (photo ID + proof of address); where the source of funds for the deposit is unclear or appears disproportionate to stated income, enquiry into and documentation of the source of funds; assessment of PEP and sanctions status. Note that CDD for AML purposes is separate from the right-to-rent check — both must be conducted
• Enhanced due diligence (EDD) for high-risk customers: Where a landlord, tenant, or transaction is assessed as higher risk — for example, where the landlord is a non-UK resident, the property is in a higher-risk area, cash transactions are proposed, or unusual circumstances exist — enhanced due diligence must be applied. EDD requires additional identity verification steps, enquiry into the source of funds/wealth, and increased ongoing monitoring
• Ongoing monitoring: Registered agents must monitor existing client relationships — alerting to unusual transactions, changes in circumstances, and any information that suggests the client may be engaged in criminal activity. Monitoring is not a one-time check at onboarding
• Record-keeping: All CDD records, transaction records, and internal reports must be retained for a minimum of 5 years from the end of the business relationship. HMRC can request production of AML records during a supervisory visit or investigation

Proceeds of Crime Act 2002 — the offences that apply to landlords

POCA 2002 creates criminal offences that can apply to any person, including private landlords:

• Section 327 — concealing criminal property: It is an offence to conceal, disguise, convert, transfer, or remove from England and Wales any criminal property. Criminal property is property that constitutes or represents a benefit from criminal conduct. A landlord who accepts rent knowing it derives from criminal activity (for example, from drug dealing or benefit fraud) may be handling criminal property
• Section 328 — arrangements facilitating criminal property: It is an offence to become involved in any arrangement knowing or suspecting that it facilitates the acquisition, retention, use, or control of criminal property. A landlord who allows a property to be used for criminal activity and receives payment may be arranging for the retention or use of criminal property
• Section 329 — acquisition, use, and possession of criminal property: Acquiring, using, or having possession of criminal property is an offence. Where rent is paid by a tenant from the proceeds of criminal conduct, a landlord who knowingly accepts the rent may commit a s.329 offence. This is most commonly relevant where a landlord discovers a cannabis farm or other criminal enterprise in their property and receives further rent payments without reporting
• The 'knowledge or suspicion' test: POCA offences require the person to know or suspect that the property is criminal in origin. A landlord who accepts rent without any knowledge or reasonable basis for suspicion of its criminal origin does not commit a POCA offence. However, where red flags are present (unexplained cash payments, property alterations suggesting criminal use, information from the police or others), continued acceptance of rent without making a Suspicious Activity Report (SAR) increases the risk of criminal liability
• The tipping-off offence (s.333A POCA): Where a SAR has been or is about to be made to the National Crime Agency (NCA), it is an offence to tip off the person concerned (the tenant or other party) in a way that is likely to prejudice the investigation. A landlord who discovers a cannabis farm and warns the tenant before calling the police or making a SAR may commit the tipping-off offence

Cannabis farms and criminal use of rental properties — practical steps

Cannabis farms discovered in rental properties raise overlapping AML, criminal, and civil landlord obligations:

• Do not enter without police attendance: A cannabis farm may be booby-trapped, and the property may be actively used by criminal gangs. Where there is reason to believe a cannabis farm or other criminal enterprise is operating in the property, do not attempt entry without first contacting the police. Call 101 (or 999 if an emergency) and report the suspicion
• After police attendance — property condition: Cannabis farms commonly cause: significant structural damage (holes drilled for irrigation and ventilation, removal of walls); dangerous electrical modifications (bypassed meters, overloaded circuits, fire risk); contamination from fertilisers and chemicals; mould from humidity; and potential asbestos disturbance. The landlord should commission a full structural, electrical, and environmental survey before any remediation works. Do not re-let the property until all hazardous conditions have been remediated
• Insurance — notify immediately: Most landlord insurance policies require the landlord to notify the insurer as soon as a claim event arises. Discovery of a cannabis farm is a claim event — the damage to the property may be covered (structural damage, electrical damage, lost rent during remediation). Failure to notify promptly may void the claim
• Making a Suspicious Activity Report (SAR): A person in the regulated sector (a registered letting agent) is legally required to make a SAR to the NCA via the NCA online portal where they know or suspect a tenant is engaged in money laundering or using the property for criminal purposes. A private landlord is not in the regulated sector and is not legally required to make a SAR — but voluntarily doing so provides a 'consent to proceed' defence under POCA (allowing continued acceptance of rent from the NCA's response period while the NCA considers the report). In practice, where a cannabis farm or other criminal enterprise is discovered, the landlord should take legal advice and consider making a SAR immediately

Frequently asked questions