The first result?
“Moldovan banks. In one case, it was alleged that 113 SLPs effectively being run as shell companies were at the centre of a scheme to launder up to $80bn (£63bn) out of Russia while others were used to help loot $1bn (£790m) from banks in Moldova, one of Europe’s poorest countries.(24 Jun 2017)”
https://inews.co.uk/essentials/news/uk/ministers-rush-close-scottish-corporate-secrecy-loophole-amid-money-laundering-claims/ accessed 12th December 2017 at 12:05
Gone are the days when a bundle of cash would be accepted wordlessly. Criminals need a way to make their money appear legitimate.
Money Laundering is the concealment of the origins of illegally obtained money, typically by means of transfers through legitimate sources such as banks or law firms.
Money Laundering funds terrorism, human trafficking, weapons trading and other criminal activities.
So what’s the link between these illicit enterprises and you buying a lovely new home closer to mum?
The value of the residential property market in Scotland (ROS yearly reports) in 2016 was in excess of £16.5 billion. The number of transactions that took place was just under 100,000.
That’s just under 100,000 opportunities for criminals to try to work their illicit gains into a legitimate system, wait a while, sell the property on and walk away with freshly cleaned cash. If asked to prove the source of these funds, the criminals can point to a standard property sale, managed by regulated professionals – nothing suspicious about that!
Law firms are particularly at risk of being targeted by criminals for money laundering purposes and property departments even more so. Standard property sales and purchases involve a relatively short time scale for a relatively large amount of money to be transferred. These transactions are essentially good value for money for the chancing fraudster.
The Government, Home Office, Police and Law Society have issued regulations and guidelines (most recently the ungainly named “Money Laundering Regulations (MLRs), Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017”) to Law firms in particular to task us with assisting them in the prevention of crime and terrorism and to assist in recapturing financial proceeds of crime.
Law firms are required to obtain an explanation, supporting documentation and to assess the overall risk in every single transaction.
When buying or selling, your legal representative (Conveyancer or Solicitor) will require to firstly verify your identity. For this you will be required to provide valid (in date) photographic identification – usually a passport. You will also required to provide proof of your current address. This should be a very recent bank statement or your most recent Council Tax bill. At this early stage you would also be provided with a Letter of Engagement and/ or Terms of Business document for your signature and return.
Thereafter “Source of Funds” will be required. You will need to provide an explanation and supporting documentation showing how and over what time period you have accumulated the funds for your deposit and to cover the Firm’s fees and Outlays.
Previous months bank statements must be provided and any incoming funds transfers may be questioned further. The bank statements should show the name of the account holder and the account details.
If either whole or any part of the funds that you will use represent a gift from any 3rd party, this is known as a “gifted deposit” and must be disclosed immediately to your Solicitor and to your mortgage lender too.
Your Solicitor will also request compliance items (photographic identification, proof of address and a signed “Letter of Gift”) from the person who gifted you the funds. The original signed letter of gift and compliance items must be delivered to your Solicitor. This can sometimes mean having the documents officially translated if the giftr’s first language is not English and therefore this obligation can be time consuming. Let your mortgage broker, lender and Solicitor know at the earliest point if you are using, or might use, a gifted deposit.
If you or anyone gifting you funds is not able to attend your Solicitor’s office, you must visit a local Solicitor have the compliance items certified. The certified items will then need to be delivered to your Solicitor.
All of the above compliance and Source of Funds points must be dealt with satisfactorily before your Solicitor is allowed to request your loan funds, make your bargain legally binding (i.e. conclude the missives), accept your money or give you your keys.
In particular, if your situation or Source of Funds is especially complex or involves cross-border transaction, you should speak with your Solicitor at your earliest convenience to determine what will be required.
Your personal information will be treated with confidentiality within the Firm.
A compliance or “Source of Funds” request is not personal but simply professional. Indeed, you may be more worried by an agent who does not appear to follow the guidelines & ask yourself, “Am I being protected?”.
We understand that fulfilling these requirements can feel intrusive or even obstructive however we appreciate your co-operation in allowing us to fulfil our obligations and to prevent the spread of Money Laundering in Scotland, and globally.