Source of Funds – Fighting the fraudsters

Mortgage Advisers face a balancing act when it comes to conveyancing. They want the process to be as smooth as possible for their clients so that latter enjoys a good customer experience (especially if they recommended the Solicitors). However, proving the source of funds, can become a sticking point.

Solicitors need to adhere to strict rules regarding money laundering and proving source of funds, and if the information isn’t readily available and clear, it can slow down a purchase for anyone.  

A failure to follow the rules could mean huge fines. And there’s a good reason for that. Money laundering and fraud is costly for UK businesses, citizens and the government. Costly to the tune of more than £100 billion a year, according to the National Crime Agency (NCA).

Take the case of Maria Michaela. She conned banks out of £13 million until she was arrested in January 2012. How did she do it? She would create a false identity, submit an offer for a house that was over the market value, then default on the mortgage. She did this multiple times.

Also, more recently in January 2020, the NCA took out a civil recovery order for £120,000 which was allegedly linked to Ulster loyalist paramilitary group, the UDA, in South East Antrim. Properties in this area were alleged by the NCA to have been bought with illegal proceeds such as mortgage fraud and money laundering.

Where there’s money, criminals and fraudsters will see an opportunity. So the mortgage industry is an obvious target. Research from fraud prevention service Cifas and WPI Economics in 2019 showed that in the first six months of that year mortgage application fraud by production of false documents rose by 14%. During the same period fraud by submitting altered documents rose by 32%.

Providing the proof

So, proving source of funds is a necessary burden for anyone purchasing a house and is a requirement by Solicitors in every case, in order to combat the bad boys and girls. Without proof of source, Solicitors can’t proceed and a purchase can grind to a halt.

Thankfully, there is a quick, convenient and secure way of getting this information to your Solicitor if you are using ConveyancingBrain. Just make sure that the documents are uploaded through the client’s account and there is no chance of vital documents getting lost in the post.

Imagine it, the crawl of snail mail that can take several days versus instant digital upload in seconds. And with no documents going missing. No more frustrating delays for anyone, just a nice smooth process that will help the Adviser receive more recommendations and more business. All whilst everyone is doing their bit to curb the fraudsters’ opportunity for criminal activity.

So, to help things along, all house purchasers need to understand (hopefully helped by their Adviser) that they can use any of the following to prove the source of their funds:

  • Savings – bank statements showing an accumulation of funds over the last six months.
  • Pension – a copy of a pension release document and a bank statement showing receipt from the pension company.
  • Sale of shares – a copy of the share release schedule and a copy of a bank statement showing money received from shares.
  • Sale of property – copy of a completion statement and copy of a bank statement showing money received from a Solicitor following the sale.
  • Inheritance – copy of a letter from executors stating the amount inherited and a bank statement showing the money being received.
  • Dividends from a UK company – copy of a divided certificate, a copy of the company’s accounts and a bank statement showing the money being received.
  • A Gift – a letter is required from the person making the gift. They will also need to prove the source of the funds.

And don’t forget, three-way communication between an Adviser, the client and the chosen Solicitor with ConveyancingBrain, creates a useful audit trail, saving time and reducing stress.

Sound interesting? Speak to us today on 0371 200 0655 or email support@conveyancingbrain.co.uk.