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AML/source of funds complications of having many Regular Savers
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The following thread was split off from the RS discussion thread. It concerned the implications of having having many regular saver accounts that were being funded each month if you were to be put through AML / source of funds / source of wealth checks. The split-off discussion was missing some context as only the most recent posts were moved, so I have tried to add that back in below…
First of all, this thread was started a month ago demonstrating that while the following discussion relates to conveyancing, similar processes are being rolled out for investment accounts and potentially even savings:
Now here are the background posts to this discussion, which hones in on Regular Saver accounts as a source of complexity for these compliance checks… really intended as an FYI to those who maintain dozens of these accounts:
An update on this (topic of AML/source of funds complications of having many RS):
While it did take one follow-up email, where I needed to walk my solicitor through the S&S ISA quarterly statements and transfer history I provided, this was accepted as satisfactory SoF evidence without the need to provide umpteen savings account statements. The many transfers in and out of my current account to these savings accounts were not queried at all. So thankfully in my case, the fact I am able and willing to use a flexible S&S ISA as my sole funding source has simplified the compliance work immensely.
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Good to see that some solicitors have some common sense.
Mine hasn't asked for any follow-up information on my source of funds, but has been in contact this week to talk about lease terms and asbestos reports, so I am hoping that everything is fine re. AML checks. I assumed there would be some questions asked about my savings, as I have sums far exceeding my salary going in and out every month. Maybe the solicitor themselves is a regular saver addict, or has met our ilk before!
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I'm sure either they, or their colleagues will not be encountering the likes of us for the first time. I think the "interest rate optimiser" is a known behavioural profile in compliance circles. But I think from the requests I received, had I needed to use my other savings for this, I would have had to provide several months of statements for each relevant account.
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Yes, I've been asked to provide evidence of my withdrawal to my current account when I make it. Though not explicitly mentioned, I will be ensuring this also shows the subsequent transfer to my solicitor. They may have to accept a screenshot in the interim (or open banking access), as I cannot generate an ad-hoc statement, so will need to wait until my usual statement date for that.
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Similar situation for me, because I've provided statements showing a large lump sum sitting in a fixed rate ISA which matures at the end of April; however if things suddenly start moving quickly I don't want to pay a penalty for early withdrawal, so I'll raid most of my regular savers instead.
Not sure how much the solicitor will check that it's the "same money" being used.
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Your comment on solicitors is based on your ignorance of how they are regulated.
The Solicitors Regulation Authority (SRA) have an obsession with money laundering compliance, because descending on firms and finding a file where there isn't clear and complete evidence of anti money laundering checks is an easy win for them.
The SRA act like the Stasi in relation to this issue, while completely failing to act on things like ambulance chasing, misleading advertising and claims harvesting that actually bring the profession into disrepute.
But money laundering compliance is an easy and very lucrative source of substantial revenue from the large fines they impose, and the SRA can also suspend solicitors from practice or even get them struck off, so they enforce their regime through fear.
For example, "common sense" tells a solicitor with a long standing wealthy client that their client can afford to buy a property with their inter-generational family wealth. But "common sense" doesn't fill in an anti money laundering checklist and photocopies of "common sense" can't be put on a file to prove that a solicitor hasn't laundered dirty money when the SRA arrive unannounced.
Anti money laundering compliance is a vastly bigger pain for solicitors than it is for clients because this saga has to be gone through for every single file. Maybe you could bear that in mind next time you feel like posting something glib like "Good to see that some solicitors have some common sense".
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In fairness I think the "common sense" being pointed to was that of not being distracted by activity that wasn't related to the funds I was planning to use for the transaction. I think it is a little harsh, btw, to call someone out in this manner based on an assumption about the meaning or intent of their post.
Though I do completely agree about where the focus on the SRA's efforts should be.
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There would be nothing to stop me refilling the flexible ISA with other funds after completion. Those other funds having not been used towards the purchase. The relevant ISA manager is of course at liberty to request source of funds information should they feel the need.
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But solicitors are told to look out for any other "activity" thrown up by the evidence they're provided with and to enquire about it. If a photocopy is retained and there's something on the document that raises the interest of the SRA the solicitor has to show that they've enquired about it and obtained evidence that the "activity" is legitimate.
That's one aspect of how the whole thing is such a pain. Solicitors hate it.
The best thing a client can do is try to provide documentation which shows clear chains of only relevant transactions and little, or preferably nothing, else. Then no enquiries need to be raised. But that is probably much easier said that done for people like us on this site.
I'm thinking of moving in the next two years, buying a new place and doing it up and then selling my house without having to worry about selling and buying at the same time, but I'm already concerned about how I can prove the source of funds for the cash purchase of my new place before I've even decided where I'm going!
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Believe me that is what I sought to do. But my solicitor has done things by the book, so required three months of payslips and bank statements showing the money credited. These bank statements obviously contained some other activity, but thankfully it seems to have been recognised as the movement of funds between savings accounts in my name. I had a load of savings statements at the ready to satisfy any further enquiries, just in case.
What I've learned in the past few months is that source of funds requirements are now being imposed on savings and investment providers (starting with investment providers), so my library of statements may yet be needed for future movements of funds between financial accounts.
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