Money Laundering Checks For Buyers In UK
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By providing false or deceptive information on their identities, incomes, and sources of funds, money launderers have been able to take advantage of the British property market. Money laundering involves purchasing a property, and then selling it at a higher price to an associated third party, trust, or company, to create the appearance of legitimate profits without relinquishing ownership. Criminals buy properties using legitimate money for the down payment and then borrow against the rest, like in a regular purchase. When the acquisition is finished, a criminal can pay off the loan, channel the funds through a lender, or sell the property straight after to recuperate their investment.
If you are looking to sell your home, a solicitor will take the proceeds from the sale and, upon your instruction, either pay off the mortgage or give you back any remaining funds. This means that no money is taken from a customer to purchase the property since the solicitor must be able to trace the source of the money. While this may seem intrusive, it is important that they are able to trace the origin of the funds.
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Make A Down Payment
Putting forward a deposit is a common practice when purchasing something. This is also referred to as making a down payment.
The solicitor who is handling your house purchase is likely to check your ID and also ask questions about the source of the money you are using for the purchase. They may want to know who your parents or other relatives are, how they got the gifted deposit and why they gave it to you. It can feel intrusive for the solicitor to inquire about the money and for proof of its origin. Your mortgage lender, who is also working on your purchase, will also be asking for evidence of where the money originated.
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Proof of Funds is a term used to describe the documentation that is presented to validate that a person has the necessary resources to complete a transaction. This evidence of having the appropriate money to complete a deal is referred to as Confirmation of Resources.
Your lender will need to know that you have the money to pay off any remaining balances or deposits that you have to make. This evidence of funds will be requested from your solicitor. Even if you are purchasing the property with cash or a mortgage, proof of funds must be provided. The mortgage offer can be used as evidence, however, any additional cash being put towards the purchase must be confirmed by your solicitor.
When we ask for proof of funds once you have made your offer, it is not only to make sure that you have the finances to purchase the house, but also to make certain that you haven’t obtained it illegally. To demonstrate that you are able to buy a home, you must show where the money is from and provide documents that prove your identity and address to your lawyer. Make sure that any money you are using for buying a house is coming from a legitimate source.
If the funds you are using in a transaction are from a legitimate source, then you should have no issues. Make sure to work with your lawyer so they can gather all the necessary information and move forward with the transaction. Your solicitor will do a money laundering check when you buy or sell property, in accordance with Money Laundering, Terrorist Financing, and Remittances (Information about Payers) Regulations 2017. Your conveyancing lawyer will conduct an anti-money laundering check on you to demonstrate the proof of your deposit, usually in the form of a bank statement.
Property lawyers who fail to conduct proper anti-money laundering checks, such as asking for evidence and sources of funds, are liable for fines and may even be sent to prison. As your solicitors take care of the legal aspects of your home purchase, it is your responsibility to provide evidence of funds everywhere money is transferred. Sources of funds are distinct from proof of funds, and your solicitor will typically require additional evidence of a deposit in order to avoid any potential money laundering. If you are lucky enough to win a sum of money, the evidence of the prize, as well as bank statements indicating where the money is located, must be sent to your solicitor.
If you are expecting funds from the sale of your own asset as a down payment, you will need to document the progress of the sale, usually by means of a status statement from the realtors managing that transaction. In accordance with individual circumstances, for instance, where their passport is from, or from where they are getting the money, a property agent or lawyer could request extra/other paperwork.
Buying property at prices that are not consistent with the market value could be a form of money laundering. As the property can be costly, those engaging in criminal activity may acquire large sums of money through a single transaction.
Real estate deals can be a great way to hide where the money comes from since a significant amount of cash is exchanged, the process is quite complicated, and there is not much monitoring. Criminals may take advantage of property transactions to disguise their funds in various methods, like having a third party purchase the property, moving the money with the mortgage or the renter, or simply buying it rapidly and then reselling it for legal money. Given that huge sums of money can be involved in one property transaction, criminals view legal firms as a convenient way of laundering large amounts of money in a single go.
No connection to a genuine conveyance process exists with regard to these payments, meaning a solicitor would be in contravention of anti-money laundering legislation if they were to act in the same manner as a bank.
If you have any queries on Anti Money Laundering examination and the required documents that must be provided before purchasing a house in the UK, contact the Property Geeks. They will be able to provide you with the necessary advice.
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