ID & Anti Money Laundering Checks
ID & Anti Money Laundering Checks
We are required by law to conduct anti-money laundering checks on all those selling or buying a property. Whilst we retain responsibility for ensuring checks and any ongoing monitoring are carried out correctly, the initial checks are carried out on our behalf by Lifetime Legal who will contact you once you have agreed to instruct us in your sale or had an offer accepted on a property you wish to buy. The cost of these checks is £75 (incl. VAT), which covers the cost of obtaining relevant data and any manual checks and monitoring which might be required. This fee will need to be paid by you in advance of us publishing your property (in the case of a vendor) or issuing a memorandum of sale (in the case of a buyer), directly to Lifetime Legal, and is non-refundable. We will receive some of the fee taken by Lifetime Legal to compensate for its role in the provision of these checks.
IDENTITY CHECKS WITH LIFETIME LEGAL
In April 2018, the European Parliament passed the Fifth Money Laundering Directive on the prevention of money laundering and terrorist financing. For this reason, estate agents must do these checks on everyone buying a property to make sure the money is coming from a legitimate source. The estate agent process explained below:
Proof of ID
As it is their legal duty to make sure that you are who you say you are, estate agents will ask you for proof of your current address and your identity. This process is called ‘Due Diligence’ which forms part of their checks.
You will be asked for some of the following forms of identification.
Proof of name:
| Proof of address:
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Anti Money Laundering Checks
When buying a property, your estate agent will ask you to confirm your ID and where you secured your money from to buy the property. This is standard practice, and they have a legal duty to do so. Read this guide to find out why.
Proof of Funds
An estate agent may ask for proof of funds at two different stages and for two different reasons. If an estate agent asks for proof of funds before you put an offer in, it may be because they want to make sure you have a genuine interest in the property to avoid any disappointment for the seller. However, you don’t have to provide proof of funds before putting an offer in.
If the estate agent asks for proof of funds once you’ve put an offer in, they are not only checking you have the money to purchase the property but also that you haven’t acquired it through criminal means. It is at this stage that you must provide proof of funds if asked.
How Can I Provide Proof of Funds?
When it comes to providing proof of funds, you can do so via the following means:
- The latest 3-6 Months Bank statements of your deposit amount (for mortgage buyers)
- Bank statements of your cash amount (for cash buyers)
- Further bank statements from past months/years to show how your money has built up over time / source of funds
- Evidence of you selling a property (if using the funds to buy the new property)
- If you've been gifted the money, a letter from whoever gifted the money
- Evidence of money being left to you in a will
- Receipts of shares being sold
Who Else Requires Proof of Funds?
Your mortgage lender, solicitor/conveyancer will also ask for proof of where your money has come from. Do not be put off if you get asked for proof more than once – it is a legal requirement for everyone to check where your money has come from.
Like estate agents, lenders and solicitors can be fined or imprisoned if they don’t undertake these checks. Your agent, lender and solicitor are all separate; just because you’ve shown proof to one, doesn’t mean the others will have seen it.
Source of Funds (SOF)
(SOF) is the process of verifying the origin of a customer's money for a specific transaction. The goal is to ensure that the funds are not from illegal activities.
Mortgage in Principle & Mortgage Offer
Whilst it is not a legal requirement for your estate agent to request an Agreement in Principle (AIP), a Mortgage in Principle (MIP), or a Mortgage Offer, providing these documents helps reassure the sellers and demonstrates that you are a serious buyer. It also helps to keep the transaction on track, avoiding doubts from either the agent or the vendor's side.
Some clients prefer to provide only an AIP or MIP; however, it is important to note that these do not guarantee mortgage approval. Final mortgage approval is subject to various factors, including your personal circumstances, the surveyor's report, the title documents, lender requirements, and more.
Providing these documents also helps us avoid unnecessary delays and rule out potential time wasters.