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All About the Anti-money Laundering Checks

  • 1 year ago
All About the Anti-money Laundering Checks

If you haven’t bought a property for a while, or if you’re a first-time buyer, being faced with anti-money laundering (or AML) checks might seem a bit of a shock. However, they are a necessary part of the property business and ultimately, they help to keep us all that little bit safer.

What are money laundering checks?

Money laundering is the process which turns dirty money into clean money. The money is dirty because it’s been earned illegally and criminals can clean it by fuelling it through legitimate financial channels such as legal cash-based businesses, gambling and – property purchases.
AML checks aim to filter out funny money and to deter criminals from using legal routes to wash their ill-gotten gains. Every property transaction in the UK is subject to AML checks and there can be big fines for anyone failing to complete these checks.

Why does the UK need AML checks?

Although money laundering may conjure up thoughts of drug cartels and arms traffickers from far-flung shores, the UK property market is incredibly susceptible.
Money laundering doesn’t just happen in countries where there’s lots of drug cartels and weapons barons. In fact, the UK property market has been very vulnerable to money laundering, with almost £7 billion in dodgy funds travelling through the property market since 2016. The high volume and high value of the UK’s property market transactions make it especially attractive to ne-er-do-wells looking to spruce up their cash.

How do I pass AML checks?

It’s not that difficult and you won’t even need to hide your Scarface poster. You just need three things.

Proof of identity

Pretending you’re someone else is always a good way to get away with a crime, so you need to prove that you are who you say you are.
Examples of the documents you’ll need for AML checks
– A valid passport
– A valid UK driving licence (with photo)
– A recent utility bill (other than your mobile phone)
– A recent bank statement
– A recent mortgage statement
– A recent tax bill (your Council Tax bill, for example)
– A recent tax notification
– A recent tenancy agreement with your local authority
– Your pension book
– Your benefits book
– Your biometric residence permit

You don’t need all of them, so don’t worry. You just have to have a few things with your photo, residency, financial details and DOB on.

Proof of funds

Your proof of funds will be used a few times, so don’t worry if you need to produce it several times – no-one’s doubting you!
Your estate agent might ask for proof of funds before you make an offer so they can argue your case more strongly and reassure the vendor. This isn’t a legal check – the legal checks come after you’ve made the offer, when your agent has to perform them to make sure you haven’t got your money by dark deeds.
While you can demur from the reassuring the vendor checks, you can’t refuse to produce proof at this stage.
Here are some of the ways you can offer proof of funds:
– Your mortgage in principle agreement from your lender
– A bank statement showing the required deposit if you’re using a mortgage
– A bank statement showing the full asking price if you’re a cash buyer
– Gifted deposit letter of proof
– Evidence of sale if you are using a property sale to fund the purchase

Source of funds

Proof of funds isn’t the same as source of funds. Source of funds proof shows how you got the money, not just the fact that you have it.
For most of us, funds will come from savings, an inheritance and/or the sale of another property. You might also have money from a pension lump sum, the sale of various (legal) investments, winnings or a financial gift from relatives. For all of these things, you can keep a paper trail in order to show estate agents, solicitors and lenders that you’re on the level.

Who needs to see anti-money laundering proof?

It’s not just your estate agent who needs to see AML proof. Your solicitor and conveyancer need to see it, as well as your lender and anyone else involved in the transaction, such as a housing association or a joint buyer.

How long do AML checks take?

As with most things of this nature, the time to complete these checks varies, but they usually take a week or two. As long as everything’s straightforward (and you’re not actually a crime kingpin), AML checks run in parallel with all the other house-buying processes so they shouldn’t delay your property transaction.

Do be careful if your money is coming from abroad

If your funds are coming from overseas, then you may face delays or even refusals.
Money coming from outside the UK, EU, EFTA or from countries such as New Zealand, the US, Australia, Hong Kong and Singapore should be OK, but funds coming from high-risk countries could be subject to more scrutiny or even be declined. It’s always best to find out if you’re at risk before you make any commitments.

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