OFSI has published its latest “threat assessment” for the property and related services sector. The assessment, an update of the 2022 assessment, is relevant to all firms and sole practitioners involved in the sale, maintenance or upkeep of residential and commercial properties, so it includes estate and letting agents, landlords, tenants, and property managers, investors and developers.
The report notes that estate agents are already within scope of the sanctions reporting requirement and that letting agents will be from 14 May. It also reminds firms that if they also suspect money laundering they should make a SAR to the NCA, quoting the OFSI threat assessment code.
The key conclusions from the report are:
- that relevant firms have almost certainly under-reported suspected breaches (accounting for only 1% of reports to OFSI in the past 3 years);
- it is almost certain that designated persons have breached UK financial sanctions by making or facilitating transactions for the benefit of their UK properties outside the scope of any applicable licence or exemption, and it is highly likely that small-scale UK firms with high risk appetites have facilitated this;
- it is highly likely that DPs have used intricate family ownership structures to distribute their wealth and almost certain that UK property and related services firms have acted as professional enablers to facilitate these sanctions breaches.
Russian sanctions are of course still the priority and account for the most suspected breaches, but other regimes are also relevant to the property and related services markets.
The report looks at the incidence of breaches and the most common payments that have been made in breach (often, salary, and maintenance and service provider payments) and sets out a number of cross-sector red flags, the presence of any two or more of which should trigger increased due diligence. It also discusses commonly used intermediary jurisdictions. The report also includes case studies, such as the fine OFSI imposed in 2024 on a concierge firm in connection with property management services it provided to a Russian DP for a UK residential property.