Identification requests when buying or selling property
on Friday, 03 December 2021. Posted in Property
By Jane Pringle
Why am I being asked to provide evidence of identification, including address verification, and source of funds by multiple parties to sell and buy property?
In 2002 and 2003, new laws were introduced to reduce money laundering activity. Essentially, the legislation is aimed to prevent dealings in criminal property and includes, for instance, becoming involved in any transactions funded in whole or in part by the proceeds of tax evasion.
As part of any Property Law Firm’s initial client instruction, it is necessary to ask a series of questions concerning your identity, including evidence of your place of residence and to obtain documentary evidence of each. This is a requirement of the Money Laundering Regulations 2003 (‘MLR 2003’).
Additionally, source of funds will need to be obtained in the form of bank or building society statements, to satisfy Firm’s legal obligations under the MLR 2003, to ensure that there is no suspicion of money laundering.
Not only do Law Firms need to comply with the MLR 2003, but so do Lenders and Estate Agents. There can be significant repercussions if the correct information is not obtained. These can range from fines to imprisonment. There has been a recent instance of a Firm being fined £27,500 over failing to carry out proper due diligence checks for two property transactions.
We appreciate that it is becoming increasingly difficult for clients to easily obtain the requisite address verification and source of funds now that most bill payments and banking are done on-line. We also appreciate that being asked to provide this information by multiple agencies, i.e., Lenders, Estate Agents and Law Firms must be time consuming and frustrating for clients.
However, until such time as one form of acceptable ID and address verification can be shared throughout the process to the benefit of all agencies, the above requirements will continue to apply.
We are aware of some identity providers working with industry stakeholders on a project to develop a ‘digital identity trust scheme’, for the home buying and selling sector. However, for the time being it is case of watch this space!
At Sampson Coward we are always striving to make our clients conveyancing journey as stress free as possible, by keeping abreast of industry changes and improved technology.