How the money laundering rules affect you
You may not have given much thought to money laundering and conveyancing – after all, you just want to buy or sell your home! But did you know:
- * Money laundering is the third biggest industry in the world
- * £90 billion in cash is laundered in the UK each year
- * Residential property transactions made up 32% of all suspected money laundering activity in the last 3 years (as reported to the National Crime Agency)
- * Solicitors can go to prison and incur heavy fines if they don’t report suspicious activity
The anti-money laundering rules for law firms are very rigorous. And, as you can see above, the penalties for not following the rules are very severe. So money laundering has a real impact on how we handle your conveyancing transaction.
What is money laundering?
Money laundering means putting money from illegal activities into the legitimate economy so its murky origins can’t be detected. Moving funds between different bank accounts, people and even countries helps the criminals to ‘clean’ their funds.
Conveyancing firms are a prime target for money launderers. With hundreds of thousands of pounds changing hands in one transaction, they see it as an easy way to launder a lot of cash in one go.
Why ID checks are so strict
One of the most important aspects of the anti-money laundering rules is client identification. It’s the first thing we do when you instruct us to act for you; without satisfactory ID, we can’t proceed.
When we ask for your ID at the start of the process, we have to check the following:
- * That you are who you say you are
- * If you are selling a property, that you are the owner of the property
- * If you are buying a property, that the funds you are using are from a legitimate source
We analyse all clients through an electronic ID verification system. This screens personal details against a wide range of databases and is a quick and thorough method of verification. We also check that the bank account details we have for you, match your address.
If you are selling a property, we check the Land Registry for details of who is registered as the owner. If you are buying, we ask for 6 months of bank statements and will query if the source of funds for the deposit isn’t clear. When someone else has given you your deposit funds (e.g. a parent or other family member) this does mean asking for more information. We understand that this might seem intrusive, but we have to track where the money came from originally.
In addition to these initial checks, we also have to monitor transactions as they progress and report any suspicious activity.
How money laundering rules affect conveyancers
Solicitors who don’t follow the rules are at risk of very heavy penalties.
In January 2019 solicitor Ross McKay was sentenced to 7 years in prison for money laundering activities. He had not made the required checks in more than 80 property transactions for clients who were subsequently jailed for money laundering and fraud.
In January 2024, international law firm Clyde & Co. was fined £500,000 by the Solicitors Disciplinary Tribunal with one former partner fined £11,900 in addition to paying costs of over £54,000 for breaching money laundering rules. They had allowed a client account to be used as a banking facility when there was no actual legal transaction in place.
So you’ll understand why we’re so scrupulous about those checks!
Yes, the rules can be cumbersome and can mean your property transaction doesn’t move as quickly as you may want it to in the early stages. But without this system of checks, you could be inadvertently helping a criminal to prosper.
Read more about cybercrime and conveyancing.
If you have any further questions about money laundering please get in touch on 0114 249 6926 or email info@pmpl.co.uk.