Sanctions lists in property management: Who must check, what is checked, and the consequences of violations

Problem: Before concluding any lease agreement, it must be verified whether the prospective tenant is on an EU sanctions list, and violations can be punished under Section 18 of the Foreign Trade and Payments Act (AWG) with imprisonment ranging from three months to five years.

Cause: The obligation does not stem from tenancy law, but from European foreign trade law; therefore, it is often not on the radar in many property management offices and is frequently regarded as a marginal issue.

Thesis: A guided mandatory step that embeds verification and documentation prior to lease agreement approval virtually eliminates the risk from day-to-day operations.

Do property managers have to check sanctions lists?

Direct answer: Under EU Regulation 269/2014, landlords and property managers are required to check whether prospective tenants appear on EU sanctions lists before concluding any lease agreement. There is no volume threshold: the obligation applies to every new lease. Violations can be punished under Section 18 AWG with imprisonment from three months to five years (up to ten years in severe cases). Key guidance document: Bundesbank Factsheet June 2024.

Why the sanctions list screening obligation surprises many property managers

The obligation to check sanctions lists does not originate from tenancy law, residential property ownership law, or real estate brokerage law. It stems from European foreign trade law. That is the main reason why it is not top of mind in many management offices and is often treated as a peripheral issue.

In fact, ever since the EU sanctions regimes came into force following the Russian attack on Ukraine, the screening obligation has been binding for all landlords and property managers in Germany. This means: anyone concluding a lease agreement must check beforehand whether the prospective tenant is listed on an EU sanctions list. Portfolio size, housing type, and commercial nature play no role.

Those who fail to systematically implement and document this bear criminal and civil liability risks that can be virtually eliminated through a structured process step.

The legal basis: EU Regulations 269/2014 and 833/2014

Two EU regulations form the foundation of the screening obligation.

EU Regulation 269/2014 (eur-lex.europa.eu) targets individuals held responsible for violating the territorial integrity of Ukraine. Article 2(2) of the regulation prohibits making funds or economic resources available directly or indirectly to listed natural and legal persons.

EU Regulation 833/2014 (eur-lex.europa.eu) complements the sectoral economic sanctions against Russia and likewise contains prohibitions on making resources available.

The crucial question is: What are “economic resources” in the context of property management?

The Deutsche Bundesbank and European legal practice classify the provision of housing in exchange for payment as the making available of economic resources. A tenancy with a sanctioned person is therefore prohibited under applicable EU law. This is not a matter of interpretation with broad discretionary leeway: the obligation exists.

There is no portfolio threshold and no floor space threshold. The screening obligation applies to an individual one-room apartment just as it does to a portfolio of 500 units.

What must be checked and when

4.1 Before concluding a lease agreement: every new lease

The check must take place before the lease agreement is signed. This is the minimum requirement. For every new lease, it must be verified whether the prospective tenant is included on an EU sanctions list.

The authoritative source is the EU Consolidated Sanctions List, accessible at sanctions.ec.europa.eu. The list is updated daily by the European Commission and contains all individuals, organizations, and entities subject to EU sanctions.

4.2 Ongoing monitoring for existing tenancies

The screening obligation does not end with the conclusion of the contract. When updates are made to the EU Consolidated Sanctions List, existing tenancies must also be screened against the updated list. This means: if an individual is subsequently added to the sanctions list, management must be informed and able to act.

In practice, many management firms set up regular screening runs, as the list is updated without a fixed schedule.

Embed the sanctions list check as a mandatory step before contract approval

An auditable leasing process embeds the sanctions list check as a mandatory step before the lease agreement is approved. Specifically, this means: without a documented screening result, the next step in the process cannot be approved.

Store the result with a timestamp and list version

The result (no match) is stored with a timestamp and the list version. Roles and responsibilities are recorded and traceable. In this way, proof of compliant conduct is generated directly within the process.

Process flow instead of an additional work step

A compliance failure in sanctions list screening is in practice almost never a lack of knowledge, but a process failure: the check is forgotten in daily operations, not documented, or performed retroactively after the contract has already been signed. With a guided process, there is no additional manual work step that gets overlooked in day-to-day business, but rather a mandatory step that governs the process.

In-depth look: Why manual compliance falls short

For those who wish to better understand why manual compliance controls in property management structurally fall short, the POV paper “Why manual compliance falls short” provides an analysis based on the everyday operations of 450+ real estate companies. In addition, reading the article on GDPR in property management, which covers data protection requirements during data processing in the leasing process, is recommended.

Conclusion

The sanctions list screening obligation applies without any volume threshold to every new lease in Germany. The legal basis is European foreign trade law, not tenancy law. The sentencing framework under Section 18 AWG is substantial. Anyone who does not systematically carry out and document this check bears an avoidable legal risk.

The Bundesbank guidance documents (Factsheet June 2024, FAQ May 2025) provide the authoritative practical basis. A guided process step that embeds the check as a prerequisite prior to contract release eliminates the risk from day-to-day business.

Download POV paper: Why manual compliance falls short | Request a demo

The penal framework under Section 18 AWG

Violations of the EU sanctions regulations can be prosecuted under Section 18 of the Foreign Trade and Payments Act (AWG) (gesetze-im-internet.de).

The sentencing framework: imprisonment from three months to five years. In particularly serious cases, such as commercial or gang-related activity, the penalty can be up to ten years.

Under civil law, a lease agreement entered into in violation of sanctions regulations is void. Payments made can be subject to restitution. Fines by the competent authorities are also possible.

Note: In the event of a confirmed hit on the sanctions list, property managers should immediately seek legal counsel before taking any further steps. Independent actions without legal guidance can worsen the situation.

What must be documented

A check without documentation is worthless in an emergency. The following should be recorded for every check:

• Date of the check

• List version or retrieval date of the EU Consolidated Sanctions List

• Screening result: no match or match (with further details)

• Responsible person who carried out the check

In this context, audit-proof documentation in property management is not an optional quality feature, but a prerequisite for being able to demonstrate compliant conduct should the need arise.

Bundesbank Factsheet June 2024 and FAQ May 2025

The Deutsche Bundesbank provides two guidance documents at bundesbank.de, which serve in practice as a reference for designing screening processes:

• Factsheet on Financial Sanctions, June 2024: Contains guidance on interpreting screening obligations and the types of contracts affected.

• FAQ on Sanctions Checks, May 2025: Answers frequent practical questions, including which types of resources fall under the prohibitions.

Both documents are publicly accessible and available free of charge. They are not legally binding, but are considered authoritative practical guides for compliant implementation.

We do not provide legal advice. Property managers are best advised to clarify specific legal questions with a specialized attorney or their industry association (VDIV, IVD).

Sources:- EU Regulation 269/2014 and EU Regulation 833/2014 (eur-lex.europa.eu)- EU Consolidated Sanctions List (sanctions.ec.europa.eu)- Section 18 Foreign Trade and Payments Act (AWG) (gesetze-im-internet.de)- Deutsche Bundesbank, Factsheet on Financial Sanctions June 2024 and FAQ on Sanctions Checks May 2025 (bundesbank.de)

Q: Do private landlords have to check sanctions lists?A: Yes. The screening obligation under EU Regulation 269/2014 is not aimed solely at commercial property managers, but fundamentally applies to anyone leasing living space anew. The regulation applies to the conclusion of a lease agreement as making economic resources available and makes no exception for private or smaller landlords. While the Bundesbank Factsheet of June 2024 primarily addresses professional market participants, it does not alter the statutory basis. Those who need clarity for their specific situation should consult a specialized attorney or their industry association (VDIV, IVD).

Q: How often must the sanctions list check be repeated for existing tenants?A: There is no legally prescribed screening frequency; however, an ongoing monitoring obligation exists. With every relevant update to the EU Consolidated Sanctions List (sanctions.ec.europa.eu), it must be verified whether existing tenants appear on the updated list. Since the list is updated without a fixed cadence, many management companies recommend a regular, documented screening run. The specific frequency depends on risk appetite and portfolio size. Property managers are best advised to clarify specific legal questions with a specialized attorney or their industry association (VDIV, IVD).

Q: What happens if a tenant is placed on a sanctions list retroactively?A: If an existing tenant is added to the EU Consolidated Sanctions List, the tenancy must not be continued in breach of sanctions. The situation is legally complex: independent actions can carry criminal liability. In such a case, property managers should immediately seek legal counsel and inform the competent authorities. Property managers are best advised to clarify specific legal questions with a specialized attorney or their industry association (VDIV, IVD).

Q: Which EU sanctions lists are relevant for property managers?A: The authoritative source is the EU Consolidated Sanctions List, accessible at sanctions.ec.europa.eu. It consolidates all EU sanctions regimes into a single list updated daily. For property management, the lists from Regulations 269/2014 (Ukraine conflict) and 833/2014 (sectoral Russia sanctions) are particularly relevant. In addition, other EU sanctions regimes may be applicable. The Bundesbank recommends screening against the consolidated list as a minimum standard for compliant verification.