Why are you asking for source of funds and wealth information?

We know it can be intrusive, and you probably feel that it is an invasion of your privacy. You are eager to proceed with your conveyancing transaction, but you are confused why your solicitor needs to know where the funds have come from to purchase your new property and why we are asking you to confirm to us in general terms how you have amassed your overall wealth. 

Under the Money Laundering Regulations, we are legally required to request from each client source of funds information to establish how that client is funding the purchase of a property as well as source of wealth information about how each client has generated their personal wealth.

We are unable to complete your transaction without having received both source of funds and source of wealth information as well as any supporting documentation which we have requested from you.  To avoid our enquiries causing a delay to the completion of your transaction it is important that you cooperate with our enquiries.

We shall ask you to provide this information at the beginning of your instructions so that we can complete our enquiries as quickly as possible.

We aim to explain in more detail the types of information we might need from you to assist you in completing our Statement.  Please note however, that every client’s situation is personal to them and the information you must provide to us is very much personal to your own circumstances.

What source of funds information might you require? 

We shall send you our ‘Source of Funds and Wealth Statement’ for you to complete at the beginning of your instructions.  Please complete this form as fully as possible.  Your answers will help us to understand what follow up questions we may have to ask you and what documentation we shall ask you to send to us.

Source of funds explains where the monies are coming from to finance your transaction.   The information we shall ask you to provide to us will therefore depend upon your own personal circumstances about how you are funding your own transaction.

Typical examples of source of funds information would include the following: 

1. A mortgage offer you have received from a lender who is willing to lend you monies to purchase a specific property;
2. Bank statements/investment account statements if you are using your own savings to either fully purchase the property or some of the purchase monies are coming from your savings.  We shall require at least 3 months of bank statements, but we may need to ask to see statements going back further than 3 months. If there have been transfers into the account from another source, such as another bank account, we will also require at least 3 months of bank statements from the accounts where funds were transferred from.  An example of this is if you have been saving some of your salary each month and transferring it into a separate savings account, we will need to see bank statements from both the account into which your salary is paid as well as the account you have been keeping your savings.
3. If you are using monies you have inherited, we will need proof of your inheritance and we would likely ask to see documents such as the estate accounts and a bank statement showing your inheritance being paid into your bank account.
4. If you have previously sold a property and you are using those monies to fund the purchase of another property, we would likely ask to see the completion statement from the previous sale transaction and a bank statement showing funds being paid into your bank account.
5. If you are using a lump sum payment from your pension, we will likely ask to see a pension statement or letter from the pension company confirming the value of the lump sum payment together with a bank statement showing the lump sum being paid into your bank               account. 
6. If your parents or another family member are assisting you with the deposit for the purchase of your property, we will need the same information  from your parents/relations for the amount of monies which they are either gifting or lending to you.

What source of wealth information might you require? 

Source of wealth explains how you have generated your wealth. We do require a detailed summary of the economic, commercial and/or personal activities that have contributed to your wealth.   Please complete this information on our Source of Funds and Wealth Statement. 

Typical examples of source of wealth information include but are not limited: 

• Salary 
• Profits from a business which you run on your own or with others
• Rental Income from investment properties 
• Sale of properties 
• Trust Fund
• Divorce Settlement
• Lottery Win 
• Inheritance 

How do I complete the Source of Funds and Wealth Statement received from you? 

Source of Funds

We need to fully understand where the monies are coming from for the particular transaction you have instructed us about. 

If you are selling a property or have instructed us to transfer a property (eg from joint names to a sole name as part of a divorce settlement) and you are not paying any monies to fund the transaction, then you will not need to provide us with any source of funds information. 

If you are purchasing a property or you are paying money in exchange for a share of a property in a transfer (eg a transfer of equity), you will need to provide us with information about the source of the funds you will be paying to us to complete your transaction. Please state clearly and in full where these monies are coming from. Please account for where every amount is coming from. 

For example, if you are instructing us to  purchase  a property for  £100,000 and you will be paying  stamp duty of £5000  we will need to understand how you are funding the full amount of £105,000.  You might have a mortgage offer for £64,000, the sum of £28,000 from the sale proceeds of a house you have previously sold, and the balance might be made up of £13,000 from your savings account.   In this example, we would need to see the following information:

1. Your mortgage offer, and
2. The completion statement prepared by the solicitor who acted for you on the sale of your previous property;
3. A bank statement showing the receipt into your account of the proceeds of sale of £28,000 and 
4. For your savings, we would ask to see 3 months statements from your savings account   and if monies are paid into your savings account from another account, we would also  need to see 3 months statements from that account. 

Please note that when we review this information we might have additional questions we need to raise with you and we might ask to see additional information depending upon our review of the documents.  This typically happens when there has been a lot of activity of payments into and out of bank accounts for example. 

Source of Wealth

We need to understand how you have generated your wealth so please complete these questions in our Source of Funds and Wealth Statement. We will still require this information even if you are selling or transferring a property where you are not paying us any completion funds which are to be paid to a third party as part of the transaction. 

Examples of typical sources of wealth include the following:

1. If your sole source of wealth is the salary you receive from your employment, please complete the Statement to confirm who you work for, how long you have worked for your employer and what your annual salary is.
2. If you are self employed or run your own business, please complete the Statement to tell us the name of your limited company and its trading name (if different), how long you have run your business for, explain how you pay yourself from the business (regular drawings/salary/dividends) and how much you paid yourself over the last 12 months.
3. If you are retired, please complete the Statement to explain what pension or investment income you are in receipt of and any other source of income you regularly receive.
4. If you receive income from a trust fund, please complete the Statement to explain the nature of the trust fund, who runs the trust fund and how much income you have received from the trust fund over the last 12 months.

Once we have received your completed Statement, we may need to ask you further questions or ask you to provide us with documentation.