Money Laundering And Conveyancing
Posted on 2nd June 2020
Money laundering is the third biggest industry in the world with Money Laundering costing the UK more than £100 billion pounds each year.
So why do money laundering rules affect the sale or purchase of a property? From the period of 2015-2018 the National Crime agency found that residential property transactions made up 32% of suspected money laundering activity as a result anti-money laundering rules for law firms are very rigorous and the penalties for not following the rules are severe.
What is Money Laundering?
Money laundering is the process of putting money from illegal activities into the legitimate economy so the origins of said monies cannot be detected. Money laundering takes place by moving funds between different bank accounts, people or businesses to help criminals “clean” their money. The reason people target Conveyancing Solicitors is because often hundred of thousands of pounds will change hands in one transaction therefore it is seen as an easy way to rid oneself of a lot of cash in one go.
Why are Solicitors ID checks so strict?
When Solicitors ask for ID at the start of the process, they are checking 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 your funds are from a legitimate source
If you are selling a property, we check the Land Registry for details as to who the registered owner of the property is. If you are buying a property, we ask for six months’ worth of bank statements so that we can check where the funds derive from. When someone else has gifted or loaned you the funds to purchase a property our Property Solicitors will ask you for more information. We understand that this can often seem intrusive however we have to track where the money came from originally. For example, if your grandparents are loaning you the money we will ask to see 6 months’ worth of bank statements from your grandparents as well as your six months’ worth of bank statements.
In addition to this Solicitors are also required to monitor transactions and report suspicious activity.
The reason Conveyancing Solicitors have to be so strict is because they risk heavy penalties otherwise. In 2019, a Property Law Solicitor Ross McKay was sentenced to seven years in prison after not making the required checks on more than 80 property transactions for clients who were subsequently jailed for money laundering and fraud. In 2017, Clyde and Co were fined £50,000.00 and three of its partners were fined £10,000.00 each for breaching money laundering rules they allowed clients to transfer funds to their client account when there was no legal transaction ongoing.
Here at MG Legal, Solicitors in Preston, we understand that the checks can seem laborious but without this system in place you could be helping a criminal to prosper.
If you have questions about your property law transaction, please contact us via email@example.com or by calling 01995 602 129.
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