Why does a solicitor need to check source of funds? Commercial Property

Under the law, solicitors must confirm their clients’ identities and check the source of any funds involved in legal transactions, for example if you are buying a house.

These checks are designed to prevent money laundering and financial crimes. Similar checks are carried out by other professionals such as banks, estate agents, and accountants.

Solicitors must comply with these checks, even if they know you personally. The Money Laundering Regulations do not allow solicitors to make exceptions.

What is money laundering?

Money laundering is when people try to hide money made from illegal activities to make it look as though it came from a legal source. Criminals may try to use solicitors to do this. For example, by using stolen money to buy property.

What information might your solicitor ask for?

Your solicitor may request the following:

• Proof of identity: such as a passport or driver’s licence.
• Proof of address: for example, a utility bill or council tax statement.
• Source of funds/evidence of where money comes from: such as payslips, savings, or inheritance paperwork (eg a grant of probate).
• Additional documentation: depending on your matter further details may be needed, such as company ownership documents or details of family members gifting you money towards a purchase.

How your solicitor will use this information

Solicitors use this information to:

• Confirm your identity and assess risks.
• Monitor transactions related to your case.
• Ensure compliance with the law and Solicitors Regulation Authority (SRA) guidelines.

Solicitors are bound by strict confidentiality rules, and your information should not be shared unless required by law. Many firms may also use trusted third-party providers to verify your identity or the source of your funds digitally.

What happens if I don’t provide this information?

If your solicitor cannot collect the required information, they will not be able to proceed with your matter or enter a business relationship with you. Solicitors who fail to follow these rules can face serious consequences. These checks are a standard requirement for all clients.