Anyone who has purchased a property in the last 20 years will likely be aware of, and familiar with, a seemingly odd request from their solicitor – “Please provide me with evidence of the Source of Funds used to fund this transaction.”
This request may seem unnecessary at first glance. You have generated the money through legitimate means, yet solicitors seem to be interrogating you for evidence that you aren’t a money launderer. It can seem unfair, especially if you have a long-standing relationship with your lawyer.
However, this is an essential part of the work that solicitors and conveyancers do as part of any property transaction. The rules have changed; the threshold for clearing money laundering checks has only increased.
Since 2017, solicitors have been bound by the terms of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. This legislation emphasizes us to ensure that all reasonable steps are taken to prevent money laundering offences. We cannot accept the funds for your property purchase until the Source of Funds checks have been met.
You may be thinking: “Hang on, I have worked hard for my money to afford a deposit. My money is in a UK bank account, so I don’t understand why I need to evidence this further.” That is not an unreasonable assumption, but as solicitors, we are not permitted to rely on money in a UK bank account without verifying its origin.
Source of Funds checks needn’t be complicated. Let’s say you have saved for 15 years for a deposit on a home and have made monthly deposits into your savings account. It would be ridiculous for your solicitor to ask for 15 years’ worth of bank statements and payslips to corroborate this. Instead, your solicitor should be asking for around a year’s worth of statements. This would show a trend of savings, which could be used as evidence of Source of Funds.
All in all, Source of Funds is an essential, if potentially unwelcome, aspect of conveyancing and property law. It is as intrinsic to the process as producing a title report, sending out enquiries or exchanging contracts. However, your solicitor should be able to provide you with a clear explanation of the need for Source of Funds and exactly what evidence they require.
At Gabb Legal, we endeavour to ensure that you are fully informed of all information we require from you throughout your legal matter, and we will always be on hand to explain any aspects of the transaction. Our team of dedicated conveyancers will always be on hand to assist you with providing Source of Funds information however we can.
Disclaimer: This article does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to provide information on issues that may be of interest. Specialist legal advice should always be sought in any particular case.