Money Laundering Checks – What Are They?

Money laundering is a process during which money that has been obtained in an illegal manner is passed through a legitimate financial channel to “clean” it. There are many different channels that criminals use for this purpose, from legal businesses that act as fronts, to loan repayment schemes, and, of course, property purchases. In order to combat this criminal activity, all property transactions are subjected to AML (anti-money laundering) checks before they can complete.

Which Documents Must I Produce for AML Checks?

There are three different categories of documents that you’ll need to produce to satisfy the AML checks:

• Proof of your identity
• Proof of funds
• Source of funds

 

Let’s take a closer look at all three of these separately.

Identity Documents

The authorities need to know that you aren’t pretending to be somebody else, so you need to provide documents that prove your identity such as a passport, photo driving licence, recent bank statement, mortgage statement, tax bill, tax notification, utility bill, your benefits or pension book, a recent local authority tenancy agreement or a biometric residence permit.

Proof Of Funds

You may need to supply proof of funds several times, but for AML purposes, you will need to supply evidence after you’ve made your offer on your chosen property. You can supply the following as proof:

• A lender’s mortgage in principle agreement
• A bank statement that shows your deposit
• A bank statement that shows the entire asking price if you’re a cash buyer
• A letter of proof for a gifted deposit
• Evidence of your property sale if you’re using this money to fund your purchase

 

Source Of Funds

The source of your funds isn’t quite the same thing as proof of having the money. It proves where the money came from and not just that you have it. The proof you’ll need will depend on the source of your money e.g. your bank statement or a letter from a family member about their gift of a deposit.

What Happens If I’m Funding My Purchase With Money From Overseas?

If you’ll be funding your purchase with money from overseas, you may find that you fall foul of today’s money laundering laws. Gifts, funds, and deposits that come unto the UK from certain countries may not pass the AML checks, so you should always run your source past your conveyancing team before committing to the purpose. If you’re using funds from a high-risk country, or even from somebody with links to high-risk countries, your funds may be declined.

To learn more, get in touch with us. We can give you our expert advice and help you find the documentation you need to ensure your house purchase runs smoothly.