Money Laundering Checks in Conveyancing Explained

When you request a conveyancing quote, you may be asked to provide identification and information about where your money is coming from. These are commonly referred to as money laundering checks, AML checks or anti-money laundering checks.

If you are buying or selling a property, you may wonder why your conveyancing solicitor needs so much information about you and your finances.

The answer is that solicitors have legal and regulatory obligations designed to prevent criminals from using property transactions to conceal or move illegally obtained money.

Understanding money laundering checks in conveyancing can make the process easier and help you prepare the right documents before your property transaction begins.

What Are Money Laundering Checks?

Money laundering checks are checks carried out by solicitors and other regulated professionals to verify a client’s identity and, where required, establish the source of funds being used in a transaction.

In conveyancing, these checks can involve:

• Verifying your identity

• Confirming your address

• Checking information about your financial circumstances

• Establishing where purchase funds have come from

• Checking the source of a deposit

• Identifying the people involved in the transaction

• Carrying out risk-based anti-money laundering checks

These checks are part of the wider anti-money laundering (AML) process.

The UK has legislation and regulations requiring relevant professionals, including many solicitors, to take steps to prevent their services from being used for money laundering and terrorist financing.

Why Do Solicitors Carry Out Money Laundering Checks?

Property transactions involve significant amounts of money, making the property market a potential target for criminals attempting to disguise the origins of illegally obtained funds.

Your solicitor therefore needs to establish who you are and, depending on the circumstances and the firm’s risk assessment, where the money involved in the transaction has come from.

This is why money laundering checks for conveyancing are a normal part of buying, selling and sometimes remortgaging property.

The checks are not necessarily an indication that your solicitor suspects you of wrongdoing.

They are a standard compliance requirement and form part of the firm’s responsibilities when acting for clients.

What Is AML in Conveyancing?

AML stands for Anti-Money Laundering.

When people search for “AML checks conveyancing”, they are generally referring to the procedures a solicitor carries out to comply with anti-money laundering requirements.

AML checks can include both identity verification and source of funds checks.

These are related but they are not exactly the same thing.

Identity Checks

Identity checks are designed to confirm that you are the person you say you are.

Your solicitor may ask for documents such as:

• Passport

• Driving licence

• Proof of address

• Bank or financial documents

• Other acceptable identification documents

The exact requirements can vary between firms and depending on the circumstances of the transaction.

Source of Funds Checks

A source of funds check is designed to establish where the money being used for a property transaction has come from.

For example, your deposit could come from:

• Personal savings

• The sale of another property

• A mortgage

• A gift from a family member

• An inheritance

• Investments

• A business

• Another legitimate source

Your conveyancer may ask you to provide evidence supporting the explanation you give.

What Is the Difference Between Source of Funds and Source of Wealth?

These terms are sometimes confused.

Source of funds generally concerns where the specific money being used for a transaction came from.

For example:

“The £50,000 deposit came from my savings account.”

Your solicitor may then ask for evidence demonstrating how those savings accumulated or were transferred.

Source of wealth is broader. It concerns how you accumulated your overall wealth.

For example, your wealth could have come from:

• Employment

• Running a business

• Property ownership

• Investments

• Inheritance

• The sale of assets

Depending on the circumstances and the firm’s risk assessment, your solicitor may need information relating to either or both.

Why Do I Need a Money Laundering Check When Buying a House?

If you are buying a property, your solicitor needs to understand the transaction and comply with applicable anti-money laundering requirements.

You may therefore be asked to complete property purchase money laundering checks before your conveyancer can progress your matter.

This can happen even if:

• You have used a solicitor before

• You are buying from someone you know

• The money has been in your bank account for years

• You have already provided identification to your mortgage lender

• You are a first-time buyer

The fact that your bank or mortgage lender has carried out its own checks does not necessarily mean your conveyancing solicitor can rely on those checks.

Your solicitor has their own legal and regulatory responsibilities.

What Documents Are Needed for Conveyancing Money Laundering Checks?

The exact documents required will depend on your circumstances and your solicitor’s procedures.

For an identity check, you may commonly be asked for:

• Passport or other accepted photographic identification

• Driving licence

• Proof of address

For a source of funds check, you could potentially be asked for evidence such as:

• Bank statements

• Savings statements

• Evidence of an investment sale

• Property sale documentation

• Probate or inheritance documentation

• Gift documentation

• Mortgage documentation

• Business accounts or financial records

You should provide only the documents requested by your solicitor through their secure process.

Why Is My Solicitor Asking for Bank Statements?

A common question is:

“Why does my conveyancer need my bank statements?”

The reason may be to help establish the source of funds for your property purchase.

For example, if you tell your solicitor that your £100,000 deposit comes from savings, they may need evidence showing the funds and, depending on the circumstances, how those savings were accumulated.

If your deposit has recently moved between several accounts, your solicitor may ask for additional information to understand the transaction history.

This does not necessarily mean there is a problem.

It is often simply part of the firm’s AML and source of funds checks.

What If Someone Else Is Giving Me the Deposit?

If a family member or another person is providing money towards your property purchase, your conveyancer will usually need to know about it.

This is commonly known as a gifted deposit.

The solicitor may need information about:

• Who is providing the money

• The amount being provided

• Whether the money is genuinely a gift

• Whether the person providing the money expects repayment

• The source of the gifted funds

Additional documentation may be required.

If you are using a gifted deposit, tell your conveyancer as early as possible rather than waiting until shortly before exchange or completion.

Can Money Laundering Checks Delay Conveyancing?

Yes, money laundering checks can delay a property transaction if the solicitor does not receive the required information or documents promptly.

For example, delays can occur if:

• Identification documents are missing

• Documents cannot be verified

• Bank statements are incomplete

• The source of funds is unclear

• Money has passed through several accounts

• A gifted deposit has not been properly documented

• The solicitor needs additional information

• Information provided does not match the transaction

This is why completing your conveyancing AML checks early can help prevent avoidable delays.

How Long Do Conveyancing Money Laundering Checks Take?

The time required for money laundering checks varies.

Straightforward electronic identity verification may be relatively quick, but source of funds checks can take longer if additional documentation or explanations are required.

The best way to avoid unnecessary delays is to:

1. Complete your ID checks promptly.

2. Provide accurate information.

3. Keep relevant bank statements available.

4. Explain unusual transactions before they become an issue.

5. Tell your solicitor about gifted deposits or other third-party contributions.

6. Respond quickly if your conveyancer requests further information.

What Happens If I Cannot Prove the Source of Funds?

If a solicitor cannot satisfy their legal and regulatory obligations regarding a transaction, they may be unable to proceed.

This is one reason it is important to be completely transparent with your conveyancer.

If money has come from an unusual or complicated source, explain the circumstances and provide supporting evidence.

Trying to hide information or giving an incomplete explanation can create more problems and potentially delay the transaction.

Are Money Laundering Checks the Same for Every Property Purchase?

No.

The level and type of checks can vary depending on the circumstances and the firm’s assessment of the transaction.

For example, a straightforward purchase funded by a mortgage and established personal savings may involve different checks from a transaction involving:

• Multiple bank accounts

• International funds

• A gifted deposit

• A company

• A trust

• Complex ownership arrangements

• Unusual payment structures

• Large transfers

• High-risk jurisdictions

Your conveyancer will determine what information and evidence they require.

Do Sellers Have to Complete Money Laundering Checks?

Yes, sellers can also be subject to conveyancing money laundering checks.

It is not only buyers who need to verify their identity.

A solicitor acting for a seller may need to verify the seller’s identity and comply with relevant anti-money laundering requirements before proceeding with the transaction.

This can be particularly important where the seller’s circumstances or ownership structure require additional investigation.

Why Are Money Laundering Checks Important When Comparing Conveyancing Quotes?

This is particularly relevant when conducting a conveyancing quote comparison.

Two solicitors might advertise similar legal fees, but you should also check what their quoted service includes and whether there are additional charges associated with particular circumstances.

When comparing conveyancing solicitors, ask:

• Are identity checks included?

• Are there separate AML administration charges?

• Are source of funds checks included?

• Are there additional charges for gifted deposits?

• Are there additional charges for complex funding arrangements?

• Are bank transfer fees included?

• What other circumstances could result in additional fees?

Do not assume that a low headline conveyancing fee represents the final amount you will pay.

What Should I Look for in a Conveyancing Quote?

A good conveyancing quote comparison should look at more than the solicitor’s basic legal fee.

Compare:

1. Legal fees

Check the solicitor’s core conveyancing charge and whether VAT is included.

2. Disbursements

Look at expected third-party costs such as searches and Land Registry fees.

3. Additional fees

Check whether the solicitor charges extra for leasehold properties, gifted deposits, mortgage work or other circumstances.

4. Money laundering and ID checks

Check whether standard AML and identity verification procedures are included within the quoted price.

5. Source of funds checks

Find out whether additional charges could apply if your funding arrangements require further investigation.

6. Communication

Consider how easily you can contact the conveyancer and how updates are provided.

7. Experience

Check whether the firm regularly handles transactions like yours.

Money Laundering Checks: The Key Takeaway

Money laundering checks are a normal part of the conveyancing process.

They help solicitors comply with anti-money laundering requirements and establish the identity of their clients and, where required, the legitimacy and origin of funds involved in a transaction.

If you are buying or selling property, prepare to provide identification and potentially evidence showing where your funds have come from.

And when carrying out a conveyancing quote comparison, don’t simply choose the cheapest solicitor.

Compare the total conveyancing cost, what’s included, potential additional fees, source of funds requirements, service levels and experience.

A transparent conveyancing quote should give you a much clearer idea of what you will pay and what service you will receive.