Money laundering is something that we have to talk about a lot. Clients who are buying a property are often puzzled about why this is… Conveyancing solicitors have a legal duty to be sure about the source of funds for a transaction.
We have found that some people are initially confused when it comes to money laundering regulations but all we want to know is that the money used for the purchase of the property is not a product of criminal activity. Money laundering is a criminal activity and we have a duty to ensure funds are not as a result of this. By providing three months bank statements of where the money was accumulated, say in a savings account, you are showing that that money is a product of your income and not illegal activity. It’s best to have all the necessary documents at the beginning of the process so that it won’t delay the transaction.
This is what we send to our clients about it:
Source of your funds
Where monies are being provided to us, for example for a purchase of a property, our policy is to ask for evidence of the source of these funds. Where the solicitor representing you requests proof of funds this should be in the form of bank statements showing a six month audit trail at the very least.
If the money in question has originated from the sale of a house or a re-mortgage, please provide the completion statement from your solicitors together with the bank statement which evidences the money being deposited. If the bank account being operated is an internet-only based account, we will require computer print-outs of bank statements.
If the money in question is from the sale of investments, we will also require evidence of this. If the monies are savings accumulated, we will require bank statements showing the accumulation of these funds. If monies are being provided by a third party i.e. not you, please ensure that you have disclosed this to your lender (if you have one) as otherwise this will delay your transaction.
It is usual practice that all the monies for the purchase of a property should come from your own resources and if not, you have a duty to the lender to let them know.
Funds from a third party
We require evidence of the source of funds from the third party as well as their identification on the same basis as set out above i.e. original identification together with original bank statements and supporting documentation. Where funds are received from a third party in the form of a gift or loan, unless you have disclosed it to your lender and it is referred to in the mortgage offer, we will have to make a report to the lender and receive written confirmation that we can proceed on this basis. In certain circumstances, your lender may revoke the mortgage offer and therefore it is important that you disclose the gift or loan at the earliest opportunity.
We believe that if you understand the process fully, you are able to make informed decisions and ensure everything needed is supplied in a timely fashion. This means the process is quicker and smoother, getting contracts exchanged and the sale completed.