Understanding Money Laundering Regulations when Purchasing Property

“I instructed my Solicitor to proceed with my matter and straight away I was asked about where my money comes from. What’s up with that?”

Solicitors are required by law to check the source of the funds their clients use for property transactions. Property transactions are a particularly good way of laundering criminal money, as the money passes through Solicitors’ bank accounts once on purchase and again on sale. While the criminal money is “parked” in the property, it probably rises in value. The government has recognised this and placed duties on Solicitors to minimise the potential for money laundering in this way.

Perhaps unsurprisingly, Solicitors are required to check that you are who you say you are. You will be asked to produce evidence of your identity and address, or you may be invited to do this via an online portal or an app.

You may already have demonstrated to the estate agents that you have sufficient money to fund your purchase. Solicitors must ask you where your money has come from, and obtain evidence of this.

The process is not always intrusive. If you are selling your existing home and purchasing with the equity from that and a mortgage, the requirements are easily dealt with. An inheritance or pension lump sum is usually not too difficult to demonstrate.

However, some other sources of funds are harder to prove as clients tend not to have the paperwork. Long-held savings are an example of this.

Some investments are treated as having a particularly high risk of money laundering. Cryptocurrency is an example in this category. You will be asked for a great deal of information about assets like this.

If some of your funds are to be from a gift from a relative, the person making the gift (frequently called a “giftor”) must provide evidence of their source of funds in the same way.  They will also have to supply evidence of their identity and address.

Your Solicitor must assess the risk of money laundering in your matter before the actual conveyancing work can begin. The conveyancing team at MJP Law do this in every conveyancing matter and will send you detailed guidance at the beginning of your transaction. You can help to finish this process quickly by supplying as much information and documentation as you can upfront, and if you are unsure as to what is needed in your particular case you can contact a member of the team who will be pleased to help.