Why do Conveyancers need to know where my money has come from?
Your conveyancer is under a legal duty to comply with anti-money laundering regulations which means they must verify where the funds you are using have come from. This is sometimes known as a ‘source of funds check’. They are also required to check that your wealth and income is consistent with the value of the property you are buying. These checks are necessary due to the millions of pounds that circulate through conveyancing firms accounts every day, making them a potential target for fraudsters and criminals. Here, Stephanie Nield discusses why your conveyancer has to verify where your money has come from and offers advice on how you can speed up the process.
Secondly, your mortgage lender will expect your conveyancer to check that the information you disclosed in your mortgage application is correct, and that you are not using any other loans to buy the property.
If your conveyancer fails to verify the source of funds and these are subsequently revealed to have been acquired by criminal activity, then your conveyancer can be given heavy fines or even handed a prison sentence. This is primarily why conveyancers take a very diligent approach when checking your documentation.
Due to what is being asked of clients, this can feel like an intrusive part of the process, yet it remains an essential task, and unfortunately is the individual’s responsibility to prove their funds didn’t come from the proceeds of crime. If, for whatever reason, you are unable to show where the funds have come from, the transaction will be unable to proceed. It can be quite frustrating to be questioned on this, and we always endeavour to deal with any potential problems at the outset of your transaction to avoid any delays at the point of exchange of contracts.
I’ve already provided this information to my lender/broker/estate agent:
Your conveyancer is under separate, more stringent regulation to consider the information provided and verify the source of funds. Unfortunately, we cannot rely on the checks that your lender/broker or estate agent has carried out and they will often only verify that you have sufficient funds to purchase the property.
We cannot accept cash payments as it is almost impossible to prove where this has come from. If you have paid a large cash sum into your bank account, you may also struggle to show where this has come from, and it is important to let us know about this asap so that we can advise you accordingly.
How can you help:
Provide as much information as possible including bank statements for any current accounts, savings accounts, ISAs etc. that the funds have passed through or are held in. we have detailed below a brief explanation of what we will require. It won’t be sufficient to provide a statement simply showing the amount is currently held in your account as we have to show how the funds were accumulated.
Ensure that your documents are clear, easy to read and identify you as the account holder or beneficiary of funds. Bank statements need to be official statements containing the date, your full name and account number/sort code.
What we require:
For example, where you have acquired the funds regularly through your earnings – As a starting point, the best evidence for savings would be a minimum of the previous 6 months of statements.
If you are receiving a gift from a third party such as a family member, please provide their details as soon as possible as we will need to make contact in order to carry out the same level of checks, including verifying their identity. We will also require them to sign a letter confirming that the money is a gift and non-repayable.
Sale of another property:
If this is due to complete at the same time as your purchase and we are dealing with this for you, we do not require anything further from you. If it was a previous sale, we will need a copy of your bank statement when the funds credited your account and a copy of the completion statement from your solicitor. It is also helpful to provide the contact details for the solicitor who acted for you.
A copy of your pension statement as well as a bank statement showing the funds crediting your account.
Sale of shares:
A certified copy of the share release schedule and a copy of your bank statement showing the funds crediting your account.
An up-to-date statement of the account, we don’t require you to withdraw the funds at this point, this can be done closer to the completion date.
A certified copy of your dividend certificate, a copy of the company accounts and a copy of your bank statement showing the funds crediting your account
A copy of the letter from the executors dealing with the estate confirming how much you received or a completion statement from the solicitor and a copy of your bank statement showing the funds crediting your account.
A copy of your receipt or other proof of your winnings and a copy of your bank statement showing the funds crediting the account.
A letter from a solicitor or court confirming the compensation amount agreed and a copy of your bank statement showing the funds crediting your account.
A copy of your redundancy notice confirming the amount to be paid and a copy of your bank statement showing the funds crediting your account.
If you are using funds from abroad or receiving a gift from someone who lives abroad, please let your conveyancer know immediately as there may be additional checks to carry out and your conveyancer may be unable to proceed if the country is classed as high risk.
By Stephanie Nield