As you progress through the process of buying a property, you should be aware that conveyancing solicitors are under a strict obligation to verify the source of the funds you use for the transaction. There are laws which dictate that the acting solicitor must verify where the funds in a transaction come from, meaning whether they come from a client or a third party like a relative, for example. The purpose of these checks is to assist government agencies in identifying financial crime under anti-money laundering legislation, the Proceeds of Crime Act and the Terrorism Act.
What this means
In essence, we must collect evidence of the source of the money you bring to the transaction, and also track its history. We need to be satisfied that the funds a client uses for a transaction are not the proceeds of any kind of criminal activity. During our checks, we will require clients to confirm certain personal details that may seem irrelevant to the transaction. Some of the questions may even seem unnecessarily intrusive. In reality, you can rest assured that the questions being asked are all about ascertaining that there is little to no likelihood that a transaction is facilitating a financial crime of some kind.
Some examples
- If a client says they won the lottery, we will need to see evidence that confirms this from the National Lottery
- If a client claims they earn £25,000 per year, and has been saving a portion of that income for a period of 3 years, we will need to see payslips and statements from savings accounts
- If a client claims to have been left money by a deceased relative, we will need to see a confirming letter from the solicitor who handled the estate
We cannot make exemptions for any of our clients, and all must be subject to the same level of scrutiny, even if we have been working with them for many years. Some find the lengths we are required to go to confirm the source of finances almost offensive, particularly when the funds come from a third party, but it is a legal requirement for us to do it. If you are unable to provide adequate information, unfortunately we cannot progress the transaction.
Money laundering is a serious offence
The average prison sentence for money laundering in 2018 was 27 months, and the punishments for financial crime are expected to increase in harshness. Government agencies are also expected to become more diligent in penalising any professionals, including solicitors, who fail to carry out their duties under financial crime legislation. So in order to be compliant with regulations, we must perform these strict checks on all of our clients in Cornwall and beyond, making sure we verify where every client’s funds come from.
Nalders Property Team
Nalders Solicitors is one of the oldest and most highly respected law firms in Cornwall. Our experienced residential conveyancing team will manage the sale and purchase of your home in a friendly, professional manner.
If you are looking to buy a new home, or sell your current home, get in touch for a no obligation quote. Our local office numbers are available at the bottom of this screen, or call 01872 241414 and we can help direct you to one of our team.