What Are Proof Of Funds And Why Do Solicitors Ask For It?

Many people who have bought a house, a business, shares in a company, created a Trust or been through financial settlement in a divorce will know that we ask you to provide details of your overall wealth and proof of where your money has come from.

Whether it's from savings, an inheritance, or a gift from family, during the legal process we'll ask you to show us how you received the money or, in other words, can you verify your source of wealth and funds?

We understand that this could feel a little bit uncomfortable and that no one loves talking about money, especially when you are making a significant lifetime decision - such as buying a home - but knowing where your money has come from is actually a vital step and legal requirement in the process.

Why do we ask for this proof?

We need to know where your funds originated from and how they came about to make sure they haven't been provided through criminal means.

We have a legal duty to make sure that money that is to be used for your matter has not been obtained through illegal channels, as this is classed as money laundering.

Criminals will engage in money laundering in order to conceal "dirty money" by passing it through layers of clean transactions. Hence the term "laundering".

If we failed to ask you for this proof, the individual working on your matter could be subject to criminal charges and the business liable for large fines.

We promise that it is not because we think you look like a criminal!

What proof of funds will you be asked for?

We will provide you with full details of the types of documents we will require at the outset. We will need, as a starting point, a copy of your current account statement. If you have transferred any funds into your current account i.e from savings or from a share sale account, we will require copies of those accounts as well. Depending on the details contained in the information initially provided we may need to ask you to provide statements for previous months.

For any cash transfers, you will also be asked for proof, such as a receipt for a car sale. So it is important to bear this in mind for the future when conducting personal transactions.

If the money was given to you as a gift from a family member or friend, then alongside your own proof of funds, your family member or friend will be required to provide their bank statements as we will need to check where their funds originated to prove their own source of wealth and funds.

If the money was provided through inheritance, we may ask for a copy of the Will, estate accounts, and proof of the money being transferred to you.

If we need to return money to you:

Under the Money Laundering Regulations 2017 (MLR 2017), solicitors are legally required to identify clients and apply Customer Due Diligence (CDD) when establishing a business relationship or conducting transactions that fall within the scope of these regulations. This includes returning funds to a client or transferring a settlement that has been awarded. These checks are not optional - they are a regulatory obligation that apply to the whole of the legal profession. Failure to comply can result in penalties or sanctions for our business and our colleagues involved in your matter. Whilst we understand this can be a cumbersome task for you, we appreciate your cooperation and hope you that you will not be offended when we request this information.

Want to chat with us?

We know that this is far from ideal but we will do all that we can to make the process as pain-free as possible.

For more information or guidance, please contact our team at hello@jcpsolicitors.co.uk or call 03333 208644.