How HMRC and OFSI Fine Letting Agents: The Three Levels You Need to Know

Important: This applies to all Calmony customers

Since 14th May 2025, all letting agents are "relevant firms" under financial sanctions regulations. In six months (April to September 2025), 121 estate agency businesses were fined £612,597. The property sector accounts for 39% of all AML fines, more than any other industry.

How the Fining System Works

HMRC and OFSI look for 100% accuracy across three areas, each carrying separate penalties.

Tier 1: Sanctioned Payments (Most Severe)

Have you paid anyone on the sanctions register? Fines up to £1m or 50% of breach value. Strict liability – intent is irrelevant.

Tier 2: Missing AML Checks (Per Gap)

Investigators will count your payees paying in and your payees paying out and compare against your checks. Every gap is a separate fine, potentially equal to the amount paid to the unchecked individual.

Tier 3: Process and Training Gaps

Even with every check in place, investigators examine your documented AML policy, onboarding procedures, and staff training records (refreshed every six months). Each gap is a separate fine. Agents have been fined solely for process failures with zero actual breaches.

Summary of Penalties

Offence	Potential Penalty
Paying a sanctioned person	Up to £1m or 50% of breach value
Missing AML checks (per gap)	Fine per gap, potentially equal to amount paid
Inadequate documented AML policies	Variable – fined even with zero breaches
Missing staff training records	Variable – fined even with zero breaches
Failure to register for AML supervision	Average £5,063 (up to £26,200)

Who Is Investigating?

HMRC can visit any agency unannounced and demand AML checks, policies, and training records. They issued 121 fines to property businesses in six months.

OFSI monitors financial sanctions compliance. All letting agents must screen every landlord, tenant, and payee against the consolidated sanctions list. OFSI found the property sector accounts for 7% of suspected breaches but only 1% of reports.

What Calmony Provides: Griffin vs Modulr

Your compliance position differs depending on your banking provider.

	Griffin	Modulr
OFSI Sanctions Monitoring	Automatic – included	Automatic – included
Identity Verification (KYC)	Mandatory via Griffin Verify	Not enforced – your responsibility. Credas AML checks available within Calmony
AML/ID Checks on Payees	Required through Griffin Verify	Available via Credas widget – optional but strongly recommended
Ongoing Re-checks	Griffin may request periodic re-verification	Not required by Calmony – recommended under MLR 2017
Compliance Audit Trail	Full trail maintained automatically	Sanctions trail automatic; AML trail if using Credas
Risk if Investigated	Strong – enforced checks with full evidence	Higher risk – no enforced ID checks means likely gaps

Griffin Account Holders

Griffin requires identity verification (KYC) before account activation via Griffin Verify (liveness checks, ID verification, mortality checks, electoral register). Incomplete verification blocks transactions, building a complete audit trail by default.

Griffin may request periodic re-verification (e.g. proof of address) under the Money Laundering Regulations 2017. Their higher risk tolerance is why they maintain client accounts when other banks have withdrawn. OFSI sanctions monitoring is included at no extra cost.

Modulr Account Holders

Calmony provides automated OFSI sanctions monitoring on all your payees, covering Tier 1 risk.

Calmony does not enforce AML/ID checks on Modulr accounts. Since 14th May 2025, you must have an AML check on anyone you pay. You can run these checks within Calmony using the Credas AML widget (liveness verification, ID capture, mortality and electoral register checks), charged per use.

If HMRC finds gaps between your payee count and your AML checks, each gap is a potential fine. The liability sits entirely with your agency.

Our strong recommendation: check every payee using Credas. A check costs significantly less than a fine.

Vulnerable Customers and Overseas Landlords

If a landlord cannot provide photographic ID, UK law allows anyone to be nominated as the landlord for management purposes. They do not have to be the property owner. The nominated person completes all ID checks and takes responsibility for receiving and forwarding funds. This same approach works for overseas landlords.

What You Should Do Now

Review coverage. Office > Outstanding AML/Right to Rent Checks to identify gaps.
Close gaps. Modulr: use Credas widget. Griffin: complete pending Verify requests.
Document your AML policy. Written procedures for onboarding, checks, and escalation.
Train staff and record it. Refresh every six months with dated records.
Monitor sanctions screening. Check your OFSI dashboard in Calmony. Aim for 100% coverage.

Need Help?

Contact the Calmony support team with any questions about compliance, AML checks, or sanctions monitoring.