Sarah is here to help house buyers and sellers get to grips with the conveyancing process. This month, she discusses the anti-money laundering rules your solicitor must follow when you buy a house…
My solicitor has asked for all kinds of documents proving my identity. Are these really necessary?
To some, the government’s anti-money laundering legislation might seem extreme, but it is there to protect the property industry against would-be criminal behaviour.
We transfer huge sums of money daily, so anyone buying property in the UK must comply with the regulations before your transaction can proceed.
As well as demonstrating you have the funds available to purchase a house, you must show the source of the money and provide proof of your identity and address to your solicitor. Acceptable identification documents include a UK or EU driving license, passport, residential permit or letters relating to your HMRC tax status, state pension or benefits. There are other documents you can use if none of these are available.
To confirm your address, we will need to see a bank statement, utility bill, mortgage statement, credit tax bill or tenancy agreement dated within the last three months. These tend to be relatively straightforward to provide and you will need to present them at the outset of your transaction so your solicitor can start work.
You may also be asked to carry out some form of online ID check. This is required of every client instructing a conveyancing solicitor and happens before the matter can be opened.
What documentation is required to prove the source of my funds?
Further money laundering checks are carried out during the transaction, relating to proof of funds. This can be provided in different ways, depending on whether you are cash buyer or you require a mortgage.
Obviously, the mortgage offer itself can be relied upon as proof of funds, but any additional money you are investing in the property needs to be verified by your solicitor. You may be asked to provide proof of funds on more than one occasion, but this is nothing to be alarmed by.
The estate agent selling the property is required by law to ask you to produce an ‘agreement in principle’ from the mortgage company or proof of cash. Your lender will also want to see you have money in the bank for any balance or deposit you are providing and proof of the total amount of funds will then be needed by your solicitor.
You can validate sources of funding in many ways. Most commonly, cash is held in one or more savings accounts and in these cases, you will need to provide six months’ bank statements showing your income and the savings amount increasing.
If your deposit is coming from equity in another property, your solicitor will verify this from the sale file. Any monetary gifts from parents or relatives will need to be accompanied by a ‘gift declaration’ that your solicitor will provide. They will also need proof of identity and funding from the person making the gift. An inheritance should be accompanied by documentation from the solicitor who dealt with it, as well as a bank statement showing where the funds have been placed.
Should you be lucky enough to win an amount of money, proof of the prize will need to be sent to your solicitor, along with copies of bank statements that show where it is now held. Alternatively, if funds are being raised through the sale of shares or investments, then evidence that they have been sold will be needed, plus copies of bank statements showing the money has been transferred to you.
It is helpful if you have the relevant documentation in place early in the conveyancing process, to prevent any delays. There are different rules if the money is coming from outside the UK, but if you make your solicitor aware of this at the outset, they can provide details of what you need to do to ensure the transaction can proceed.
Whilst it may seem intrusive, please remember, your solicitor does not have any option but to request this information and it is essential to the smooth running of your purchase. For further details about the anti-money laundering regulations, don’t hesitate to contact me or my conveyancing colleagues by emailing info@tayloremmet.co.uk.
