Q. I am an overseas investor purchasing property here in the UK for the first time and so far everything has gone really well, I have a solicitor here in London that was recommended to me via a colleague that is excellent but I have just hit a bit of a brick wall. Basically I have transferred all the funds over from Hong Kong to my UK bank account in readiness for exchange but my solicitor is refusing to allow me to transfer any funds to her client account until she has carried out stringent money laundering checks. This has gone on for a couple of weeks now and I have still not been able to satisfy their criteria, despite providing copious amounts of documents. Meanwhile the seller is becoming extremely agitated and now unsure whether I am actually committed to the purchase and has now threatened to pull out unless I exchange in the next 7 days. Is this normal or are my solicitors being overly cautious or pedantic? I really don’t want to lose this property.
A. Money laundering is generally defined as the process by which the proceeds of crime, and the true ownership of those proceeds, are changed so that the proceeds appear to come from a legitimate source. Solicitors are key professionals in the business and financial world, facilitating vital transactions that underpin the UK economy. As such, they have a significant role to play in ensuring their services are not used to further a criminal purpose. As professionals, solicitors must act with integrity and uphold the law, and they must not engage in criminal activity. Money laundering and terrorist financing are serious threats to society, losing revenue and endangering life, and fuelling other criminal activity. As you can appreciate, buying property with cash raises a serious red flag to any solicitor and as such you will be subject to them carrying out their due diligence to ensure the funds have derived from a clean source. The regulations aim to limit the use of professional services for money laundering by requiring professionals to know their clients and monitor the use of their services by clients. Regulation 8 of the Money Laundering Regulations 2007 requires they ascertain the source of funds where necessary. It is going to almost always be necessary and appropriate for a solicitor to, at the very least, ask about the source of funds. Providing the information the solicitor has asked for in regards to where the money has derived from originally is the only way forward, do not be offended by this, they are simply complying with the money laundering regulations.