Blogs

I expect you raised an eyebrow when your solicitor asked you for copious paperwork to support your property purchase - some of it rather financially personal.

This is the law, due to property purchases being one of the largest sectors facilitating money laundering in the UK.

What is money laundering?

Money laundering is the disguising of financial assets so they can be used without detection of the illegal activity that produced them. Through money laundering, the individual transforms the monetary proceeds derived from criminal activity into funds with an apparently legal source that can then be disposed of at a later date. (Examples of this include but are not limited to using non taxed income towards the property purchase).

The estate agent, your solicitor, the seller's solicitor and your mortgage lender are all under a legal requirement to establish the source of funds and proof of wealth for any property transaction.

Last year, it was reported that a solicitor was struck off and jailed for nine months after being convicted of several counts of “failing to comply with the money laundering regulations” and one count of “failing to disclose possible suspicions activity”. 

That is why your solicitor, or conveyancer will thoroughly review the details of your proof of funds.

“Proof of funds” is all about proving where the money you are using to facilitate your property transaction originated from and how you have come to have the money available for your transaction.  

If your money has built up over time through savings from your salary or other forms of investments, 6-12 months of bank statements could be required. Assuming that these show a consistent pattern, and the numbers make sense, then this could be all that is needed.

Where a family member is providing a financial gift – maybe from "the Bank of Mum And Dad” where you are lucky enough – we will also need bank statements from them. We understand that parents and or other donors may prefer not to send their personal details to you as the receiver of the gift, and it is for this reason that we will accept those statements direct from the source.

There’s no limit to what a solicitor/conveyancer can or should be requesting under the Anti-Money-Laundering regulations [The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR2017)], when it comes to dealing with source of funds, but all that the regulations state is it must be sufficient evidence to understand their full history.

Whilst it may feel like it, your solicitor or conveyancer is not trying to be difficult, nosey, awkward, unhelpful or generally delaying matters when they need and therefore ask for further information about the funds. They are just being diligent and making sure that they comply with the regulations.

All that we ask is that you help us to help you. And understand that preventing crime is in the best interests of everybody, even if in doing that may add a little extra inconvenience for you.

By Bradley Bernett, Partner, Curwens LLP