guide to
source of wealth

McSherry Halliday offers this information as a guide to clients who have been asked to provide evidence of source of funds or source of wealth, to enable our firm to comply with anti-money laundering regulations (AML) imposed upon us by law.

why do you need to provide
proof of funds?

One of the first requests a solicitor firm will ask of you when you are purchasing a property is to exhibit source of funds. This applies to both cash buyers and those with help from a mortgage (as the solicitor will require to see where the source of the deposit fund has originated from). In order to comply with anti-money laundering regulations, solicitors must carry out obligatory checks to establish the source of funds being used.

Providing the necessary documentation is a fundamental part of the conveyancing process. If sufficient proof of funds cannot be given, then it is likely that the transaction cannot proceed. Deposits or cash purchases on a property require the conveyancer to deal with considerable amounts of money, meaning law firms are a prime target for criminal activity and fraudsters to attempt to launder cash through firms. There is no set protocol that all law firms must follow; thus, it is the appointed solicitor’s responsibility and due diligence to ensure that the funds are from a legitimate source.


Group 6675

what is the difference between source of funds and
source of wealth?

Source of wealth describes how a client, or their family, has acquired their total wealth. For example, the critical focus for the solicitor is to understand what has generated or contributed to the accumulation of a client’s financial status or other assets.

When asked to provide a source of funds, the onus is on the buyer to provide documented proof of how the money came to be in their possession. Depending on individual circumstances, clients may need to provide some or all of the following:

  • Savings (ISA/Investments) – includes regular payments from an income such as a salary or pension. Bank statements can provide satisfactory evidence of this. The solicitor will advise how many months of bank statements they require sight of. These allow the solicitor to see the money being paid by either an employer or pension scheme where the money can be seen gradually increasing in your bank account over time.
  • Sale of another property – a copy of the completion statement from your solicitor and a copy of your bank statement showing the sale money being received following completion, plus bank statements to show funds have remained within your account.
  • Inheritance – a copy of any statement regarding the finalisation of the estate from which funds have been paid will be required, along with vouching payments made into a relevant bank account from the inheritance entitlement, plus bank statements to show funds have remained within your account. 
  • Gift from a relative – the personal identification for the relative, i.e. passport or driving licence, proof of address of each individual the contribution is associated with, for example, both parents. Additionally, would require evidence of a ‘trail’ of funds from the relatives.
  • Sale of shares – if shares have been sold to produce funds to assist with the transaction, then the associated sale contract notes will be required along with statements for any relevant bank transfers and payments.
  • Loan (Director’s/Personal) – If a personal loan has been taken out to release funds, a copy of the loan agreement and statements vouching for payment of the loan funds will be required. If the loan is from a company in which you are involved, i.e. Director/Shareholder, then vouching will be necessary from company accounts, company bank records and possibly company auditors.