Conveyancing – why we have to ask you about your source of funds and source of wealth

The large amount of money that changes hands in conveyancing transactions every day makes the property market potentially susceptible to fraud. This is why solicitors must be extremely careful.

It means we have to ask you a lot of questions, some of which may appear ‘over the top’.

However, we take our responsibilities very seriously and ask that you work with us to ensure that your transaction remains safe.

Like banks and other professionals, we are required to follow strict rules issued by the government to protect society from financial crimes such as money laundering.

What is money laundering?

Money laundering is where criminals, including drug traffickers and fraudsters, move money around and through the UK to ‘clean’ the cash generated by crime.

They do this by buying up assets, like houses and businesses, which can then be passed off as genuine sources of income and spent freely and without raising suspicion. In some cases, this money is used to fund terrorism.

This is why, to be safe, as well as checking your identity, we have to scrutinise the money you are using.

There are two elements to this process – source of funds checks and source of wealth checks.

What are source of funds checks?

This refers to the money that is being used to fund a specific transaction. It is not enough to confirm which bank account the money will come from; we need to understand where the funds in that account came from.

We will therefore carry out enquiries to understand the source of funds for the transaction we are advising on. We must be satisfied that:

1. The transaction is being funded via a legitimate source.
2. The transaction is consistent with what we know about you and your usual business activities.
3. The source of funds is consistent with your source of wealth.

What are source of wealth checks?

The source of wealth checks refer to the origin of your total assets. It describes the economic, business and commercial activities that generated, or significantly contributed to, your overall net worth or entire body of wealth.

Here’s an example:

• If you are a first-time buyer paying £40,000 towards your purchase and those funds are held in your bank account, we will need to see copies of your bank account statements (for the last six months) showing the money there.
• We will also need to see your wage slips showing your income. We need to be satisfied that you could reasonably have saved the £40,000 from your earnings.
• If some of that £40,000 came from an inheritance or premium bonds, we would ask to see evidence of that.

We can’t cover every scenario, but we hope this article helps you understand that we have good reasons for asking the questions we do and why we may be unable to proceed if any questions remain unanswered.

Get in touch

Wards Solicitors wins high praise in the 2023 edition of the independent Legal 500 guide of outstanding legal professionals for its exceptional professional service standards and high levels of technical expertise.

Our expert and highly regarded Conveyancing Team work across all 12 of our local offices in Bristol, South Gloucestershire, Bath and North East Somerset and North Somerset. Please don’t hesitate to get in contact.