AML Regulations in Conveyancing Transactions
For ten years I trained as a legal executive, specialising in the buying and selling of houses (conveyancing). The last couple of years I found the job to be increasingly stressful due to burdening regulations, particularly concerning laws and regulations around money laundering. The fear of losing my personal licence by making a mistake led to the job I always loved becoming something I despised. I had just one exam left to be qualified but I took the decision to step away completely and find a new job.
Having been in a relationship with a recovered disordered gambler for the past few years I could not believe the lack of compliance to money laundering regulations by gambling companies. My partner showed me evidence from his Subject Access Material where he was depositing thousands upon thousands daily, with no questions asked. Have a read below of the hoops I used to have to jump through to comply to the strictest of compliance which shows what an absolute farcical scenario disordered gamblers are faced with showing that the lack of compliance to money laundering regulations are at the expense of profit and flouting laws. Why has the regulator or the courts not picked up on this?
For a conveyancer to be able to proceed with a purchase transaction it is necessary to ascertain where funds (over and above mortgage advances) have come from. For this it was a requirement to show the last 6 months bank statements from a client, if the money had not been in the same account for 6 months, it would need to be shown where it had come from. If money was being gifted by a family member towards the purchase price then the person who is gifting the money would be required to provide the same evidence of source of funds (6 months bank statements).
Also, in respect of cash, Solicitors offices are not allowed to accept more than £250.00 in cash. Any amount to be paid which is more than this sum has to be paid from a bank account to show where it has come from.
If money is received from an unknown account (i.e. Mr Smith is the client and the money is received into the account by Mr Brown), these funds will be returned unless evidence can be provided as to how the money came to be in Mr Brown’s account.
An example of this is a house purchase in Halifax I dealt with for the sum of £42,000.00. The client wished to obtain a mortgage of £20,000.00. The client put in £10,000.00 of the balance of the purchase price and the client’s parents’ gifted £12,000.00 towards the price. Evidence of source of funds, going back six months, was required from the client in respect of the £10,000.00 and from the parents in respect of the £12,000.00 gift.
Without this evidence conveyancers are not permitted to proceed with the transaction under AML regulations.
A copy of the standard requirements in respect of ‘Source of Funds’ which is provided to clients at the outset of the transaction is as follows:
Source of Funds
It is necessary to put strict procedures in place as millions of pounds pass between conveyancing solicitors on a daily basis which make the sector a huge target for criminals and fraudsters.
When looking to prove the source of your funds it may feel like you are guilty until proven innocent. Sadly this is the case and it is your responsibility to prove this money didn’t come from the proceeds of crime.
You may feel aggrieved that after all of the years spent saving that this is unfair to question why should you have to provide all of this information. The answer to this is that with so much fraud within conveyancing it is essential solicitors become even more vigilant.
It is important to note that under the Proceeds of Crime Act 2002 (POCA), if the solicitor suspects that you have criminal property, they are required to make a report that they suspect you are engaging in money laundering. If they do not, they are themselves liable for prosecution for failure to report under the POCA.
Until we have satisfied ourselves of the source of funds, we cannot proceed with the purchase on your behalf.
Categories for Proof of Funds
The best evidence of savings will be bank statements for the last 6 months showing an accumulation of funds in your bank account.
If you have more than one bank account containing savings, you will need to provide statements for the last 6 months for those accounts.
A copy of your pension release document and a copy of your bank statement showing the money being received from the pension company.
3. Sale of Shares
A copy of the share release schedule and a copy of your bank statement showing the money being received from the shares.
4. Sale of another property
A copy of the completion statement from your solicitor and a copy of your bank statement showing the money being received from the solicitor following the sale. If Harold Stock & Co acted on your behalf in relation to the sale, it will not be necessary to provide this proof.
A copy of the letter from the executors stating how much you are being paid as a beneficiary and a copy of your bank statement showing the money being received from the solicitor/executor’s bank account.
6. Dividends from a UK Company
A copy of your dividend certificate, a copy of the company’s accounts and a copy of your bank statement showing the money being received from the Company.
7. Gambling Winnings
A copy of your receipt proving your winnings and a copy of your bank statement showing the money being received.
8. Compensation Award/Court Settlement
A copy of your letter confirming your compensation settlement from a Solicitor and/or Court and a copy of your bank statement showing the money being received from a third party/Court/Solicitor.
We will require a letter from the person making the gift. The person making the gift will also have to prove the source of the funds in the same manner as you would have to. If you indicate within your questionnaire that you are to receive a gifted deposit, we will send further information to you in this regard.
If your money has been generated through other means, please contact us immediately to discuss this further and so that we can advise on a suitable means of proving the source of your funds.
We can only accept cash payments up to the value of £250. It is almost impossible to prove the source of your funds for lump sums of cash. Even lump sums of cash paid into a bank account may prove difficult when it comes to proving the source of funds.
So the obvious question to ask is that why are disordered gamblers permitted to spend similar amounts to the purchase of a house, sometimes in just a matter of days, with none of these checks that I had to go through? Furthermore, these people are suffering from a multitude of mental disorders whilst spending these sums, often stealing and borrowing beyond their means to do so. It seems alien to me that I had to go through these rigorous checks yet the gambling companies don’t even require a payslip to allow a customer to deposit funds before the account is opened. If crime was involved in any of the house sales/purchases I had dealt with, I’d have lost my job in an instant. What exactly happens when the same occurs in the gambling industry? From what I have heard, not much, other than people with mental disorders being thrown into jail for long sentences.