Bricks, Mortar and Sanctions

In this week’s newsletter, we shall proceed with highlighting some of the regulatory developments coming out of the UK.

This time focusing on the property sector.

Have you ever wondered how sanctioned individuals keep control of UK assets despite sweeping restrictions?

According to OFSI’s latest Property and Related Services Threat Assessment, property firms such as estate agents, letting agents, managers, and investors are increasingly at risk of becoming unwitting (or knowing) enablers of sanctions breaches.

A few points stand out:

• Underreporting is a problem. Property firms account for just over 1% of suspected sanctions breach reports. Far below what OFSI believes reflects reality.

• Russian DPs dominate the landscape. Over 75% of property-related reports involve Russia. Complex structures, family proxies, and layering tactics are routinely used to mask ownership.

• Enablers come in many forms. From concierge services to letting agents, even small firms with longstanding ties to high-risk clients are under scrutiny.

• Red flags are everywhere. Opaque ownership, unexplained payments, dormant companies, and intermediary jurisdictions like BVI or Cyprus should all trigger suspicion.

• New rules are coming. From May 14, 2025, UK letting agents, both commercial and residential, must report suspected sanctions breaches.

The regulator’s message is blunt: firms must sharpen due diligence, report promptly, and treat complex structures with healthy skepticism. The spirit is aligned to a long-term view that in sanctions enforcement, ignorance is no longer a defense.

Source: Report

Thanks for reading. Curious how this might affect your business? Let’s talk.

Alexey