How HMRC and OFSI Fine Letting Agents: The Three Levels You Need to Know
121 letting agents were fined £612,597 between April and September 2025 - property is now the most fined sector in the UK.
Important: this applies to all Calmony customers.
Since 14th May 2025, all letting agents are "relevant firms" under financial sanctions regulations. 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 count your payees paying in and 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, and electoral register checks. Incomplete verification blocks transactions, building a complete audit trail by default. Griffin's higher risk tolerance is why they maintain client accounts when other banks have withdrawn.
Modulr account holders
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, and 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. The 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 the 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, and aim for 100% coverage.
Need help?
Contact the Calmony support team with any questions about compliance, AML checks, or sanctions monitoring.