We advise on transactions which involve significant sums of money, making us and our clients a target for potential fraud. This is why we must be extremely careful to protect you as clients, and ourselves as a business.
There are strict rules issued by the government to protect society from financial crimes such as money laundering.
One of the mandatory checks we must conduct is a verification of the source of funds or wealth. These checks are designed to combat money laundering*, terrorist financing, and other financial crimes.
Source of Funds (SoF)
This refers to the origin of the funds being used in a transaction. Whether you’re buying a property, setting up a business, or investing in assets, we need to verify that the money you’re using has not come from illegal activities.
We will carry out ‘source of fund’ checks, to confirm where the money has come from to understand:
- The transaction is being funded via a legitimate source
- The transaction is consistent with what we know about you and your usual business activities
- The source of funds is consistent with your source of wealth
Here are some examples of the type of proof we may ask you to send us:
- Bank statements
- Pay slips
- Inheritance documentation
- Sale of assets
- A gift
Source of Wealth (SoW)
SoW is a broader check and relates to the entirety of your wealth, including assets, investments, income, and any other financial resources. SOW checks help solicitors understand your financial background and assess the risk associated with a transaction.
For SOW checks, we might ask for documents such as:
- Property ownership proof
- Investment portfolios
- Business ownership proof
- Tax returns
These checks can help us mitigate the risk of financial crime and ensure the integrity of transactions.
What is money laundering?*
Money laundering is when criminals, such as drug dealers or fraudsters, move money through the UK to make illegal cash look legitimate. They do this by buying things like houses and businesses, which can then be claimed as legal sources of income, allowing them to spend the money without anyone noticing. Sometimes, this money is also used to fund terrorism.
To prevent this, we not only check your identity, but also carefully review where your money is coming from. This process involves two steps: checking the source of funds and checking the source of wealth.
If you have any questions, or would like further details on Source of Wealth or Source of Funds, contact the team on 0300 124 0406.