When you buy a property, your solicitor is required by law to carry out an anti-money laundering or AML check. They may ask a third party to do this on their behalf and report back to them.
AML checks are intended to try and reduce money laundering that can come from illegal trade and could fund terrorism. Following an initial AML check, you could be notified that your situation has raised one or more red flags. This is not uncommon and is nothing to worry about, but it does generally mean that you will need to provide more information.
Red flags include the following situations:
If you are a cash buyer
You can expect to have to provide evidence of the source of your money if you are a cash buyer. If you are thinking of buying a property and you will be a cash buyer, you are advised to start putting together documentation showing exactly where your money came from before you find a property to buy. For example, if you have inherited money, you could provide a copy of the Will and estate accounts. If you have saved the money, you could provide copies of your bank statements showing the payments in you have made.
Where your documentation is incorrect or insufficient
It is a red flag to provide documentation that is not correct, for example, where your name does not appear correctly or there are inconsistencies. Similarly, if you do not provide adequate paperwork to show where funds came from or you are slow to produce this, it can be a warning to AML officers within an organisation.
You should make sure that where your name changes you have documentary evidence to explain this and that you take the time to obtain all of the paperwork needed to show where your money has originated.
If you have only owned your existing property for a short period of time
Those laundering money often choose property to do so because of the large sums that can be cleaned. Property may be sold on quite quickly by money launderers, meaning that if you have only owned your home for a short period, you will need to explain why.
You should also be aware that some mortgage lenders will not lend against a property that has been owned for less than six months, so you could find that your buyers have difficulty securing a mortgage.
If you are an overseas buyer
Money laundering by overseas buyers is considered to be a substantial problem in the UK. This means that if you are an overseas buyer, you are likely to be subjected to more checks and due diligence before you can buy a property.
Where the source of your money is unusual
It is accepted that money often comes from savings or inheritance and provided that adequate paperwork is provided, this does not usually cause a problem. However, if your money is from a more unusual source, this is likely to be a red flag and you will be investigated further.
Providing information for AML checks
If you are asked to provide further information, you should try and do this as quickly as possible. Criminals will stall and be evasive; by being open and responding quickly, you will help to allay fears.
Try to ensure all of the documents you provide are accurate and wherever possible, put everything together early on, before you start the purchase process.
Usually, you will be able to satisfy the checks if you have adequate evidence of your identification and the source of your funds. If several red flags are raised and you fail to satisfy enquiries, your solicitor’s Money Laundering Reporting Officer will become involved. They will look at the situation and decide whether they are required to enter a Suspicious Activity Report with the National Crime Agency. They are required to do this by law when red flags are raised and not subsequently explained.
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