HMRC AML guidance: Key changes for estate and letting agents

On 8 July 2026, HM Revenue & Customs (HMRC) published a comprehensive AML manual for the businesses it supervises^[1]GOV.uk. The guidance provides greater clarity on how firms should identify, assess and manage financial crime risk and, in several areas, seeks to strengthen controls around vulnerabilities that have long featured within the UK property market.

More businesses may be in scope

One longstanding challenge in the property sector has been ensuring that all relevant intermediaries are captured within the AML regime. Property transactions increasingly involve a wider range of participants than traditional estate and letting agents. Where firms incorrectly conclude that they fall outside the regulatory perimeter, AML controls may be absent altogether.

HMRC’s guidance adopts a broad interpretation of estate agency activity. The definition of an EAB^[2]https://www.gov.uk/hmrc-internal-manuals/anti-money-laundering-guidance-for-supervised-businesses/amlg2200 extends beyond the traditional high street model and may include online agents, property sourcers, deal packagers, auctioneers, relocation agents and developers undertaking estate agency activity through special purpose vehicles. Operating online does not automatically place a business outside the regulations. Firms that recommend properties, arrange viewings, transmit enquiries or otherwise act as intermediaries may require HMRC registration.

The LAB perimeter^[3]https://www.gov.uk/hmrc-internal-manuals/anti-money-laundering-guidance-for-supervised-businesses/amlg3300 is also wider than many firms assume. For AML purposes, it applies where monthly rent is £10,000 or more for a tenancy of at least one month and may capture commercial letting agents, corporate landlords, serviced accommodation providers, relocation agents and guaranteed rent businesses.

Property businesses should not assume that their operating model, use of technology or position within a transaction automatically places them outside the AML regime. The guidance encourages firms to review both their activities and legal entities to ensure that all relevant business lines are correctly registered and subject to appropriate financial crime controls.

Complete CDD before the transaction gains momentum

One of the recurring vulnerabilities in the property sector is that CDD begins too late in the transaction. Once a property is marketed or an offer accepted, firms may be less willing to challenge clients or decline instructions.

HMRC’s message on CDD is to do it early. Seller checks should be completed before terms of business are agreed and before a property is marketed. Buyer checks should begin as soon as possible and, ideally, before an offer is accepted. Agents must identify the buyer and seller, verify beneficial owners and confirm the authority of anyone acting on another person’s behalf. This is particularly important in probate, insolvency, repossession, trust and corporate ownership cases.

For LABs, landlord checks must be completed before the property is advertised. Tenant, guarantor and trustee checks must be completed before the agreement is entered into. HMRC also expects CDD to be completed before a deposit is accepted to secure the property.

The practical implication is that CDD can no longer be treated as a standalone compliance exercise. These controls should be embedded within listing, offer, deposit and tenancy processes so that a transaction cannot progress without the required checks being completed.

A bank statement is not source of funds

One of the recurring vulnerabilities in the property sector is the tendency to focus on whether funds are available rather than how they were generated. A bank statement may confirm that money exists, but it does not explain whether those funds originated from employment, business activities, investments, inheritance or the sale of another asset. Property transactions can therefore appear legitimate even where the underlying source of wealth or source of funds has not been adequately understood.

HMRC’s guidance reinforces the distinction between proving that money exists and understanding where it came from. Firms should pay particular attention to gifted deposits and third party payments, cash purchases, substantial advance rent payments, virtual asset proceeds, last minute changes to payment arrangements and transactions that appear inconsistent with a customer’s income or wealth.

Importantly, the file should record why the explanation was considered credible, not simply which documents were collected. The emphasis is on understanding and evidencing the story behind the funds rather than assembling a checklist of documents.

Significant vulnerabilities remain

HMRC’s new sector risk assessments for EABs and LABs provide an important reminder that headline sector ratings do not tell the whole story. While the 2025 National Risk Assessment classifies EABs as medium risk and LABs as low risk, HMRC identifies a range of continuing vulnerabilities affecting both sectors, including opaque ownership structures, beneficial ownership challenges, professional intermediaries, higher risk jurisdictions and unusual payment arrangements. HMRC also highlights the risks associated with complex ownership structures, overseas entities, trusts and high value property transactions, while noting that vulnerabilities persist despite the lower rating applied to LABs.

Property firms should therefore assess risks linked to fraud, corruption, organised crime, sanctions evasion, modern slavery, human trafficking and proliferation financing, including exposure to higher risk jurisdictions, overseas structures, beneficial owners, intermediaries and unusual payment routes. HMRC expects business wide risk assessments to reflect the firm’s actual customers, services, locations, delivery channels and transaction types rather than relying on generic sector ratings.

Responsibility cannot be outsourced

Property transactions frequently involve estate agents, letting agents, solicitors, lenders, accountants and other professional advisers. One longstanding vulnerability is the assumption that another party has already carried out the necessary financial crime checks or will identify and report suspicious activity if concerns arise. In practice, that can leave gaps in scrutiny, particularly where each participant only sees part of the transaction.

HMRC’s guidance reinforces the reliance that a solicitor, bank or another estate agent does not transfer regulatory responsibility. Formal reliance arrangements must comply with the Money Laundering Regulations and firms must be able to obtain the underlying evidence when required.

Firms should also never assume that another professional will submit a Suspicious Activity Report. Each regulated business remains responsible for acting on its own knowledge or suspicion. The practical implication is that firms should understand how financial crime controls operate across a transaction, while retaining independent responsibility for their own risk assessments, due diligence and reporting decisions.

What should firms do now

HMRC has provided much greater clarity on how firms should identify, assess and manage financial crime risk. EABs and LABs should assess whether their existing controls address the risks presented by complex ownership structures, beneficial ownership challenges, professional intermediaries, higher risk jurisdictions and unusual payment arrangements. A practical starting point is a documented gap analysis covering:

• HMRC registration;
• Business-wide risk assessments;
• CDD timing and beneficial ownership;
• Source of funds and source of wealth;
• Deposits, offers and tenancy controls;
• Reliance and outsourcing;
• Suspicious activity reporting;
• Staff training; and
• Quality assurance and file testing.

Particular attention should be given to whether controls operate at the point where risk can still be managed. In many cases, the effectiveness of a control will depend less on its existence and more on when it is applied within the customer journey.

What vulnerabilities remain?

The new guidance addresses several longstanding weaknesses in the property sector, particularly around the timing of CDD, source of funds enquiries and risk assessment processes. However, some vulnerabilities discussed throughout this series remain difficult to address through guidance alone.

Property transactions may still involve complex overseas ownership structures, trusts and professional intermediaries, particularly where information must be obtained or verified across multiple jurisdictions. Firms can also have only partial visibility of a wider transaction, with different participants holding different pieces of information.

The guidance strengthens expectations and provides greater clarity on HMRC’s supervisory approach. It does not remove the need for professional judgement where ownership arrangements are complex, information is difficult to verify or the circumstances surrounding a transaction do not fully align with a customer’s profile.

The real message

These vulnerabilities arise because ownership structures can be difficult to untangle, funds can pass through multiple parties, professional intermediaries may only see part of the transaction and commercial pressure can make challenge more difficult as a deal progresses.

HMRC’s new guidance seeks to address those risks through greater clarity around scope, due diligence timing, what firms should understand about their customers and funds, and how risks should be assessed and documented.

The strongest firms will not treat the guidance as a compliance checklist. They will use it to strengthen challenge at the point where risk can still be managed: before a property is marketed, before an offer is accepted and before funds are committed. Even then, the exercise of professional judgement remains critical where ownership arrangements are complex, information is difficult to verify or the transaction does not align with the customer’s profile.