Identity and source of funds checks: what your conveyancer asks for, and why

The short answer

Before a conveyancer can act for you, the law requires it to check who you are and, when you are buying, where your money comes from. The rules are the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which cover law firms acting in property transactions. Each firm is responsible for its own checks, so expect to be checked again even if your bank or another firm has checked you already.

The checks come at the very start, and little can happen until they are done. If a firm cannot complete them, it must stop acting for you. Having your documents ready is one of the simplest ways to keep your move on time.

Proving who you are

Expect to be asked for:

• Photo identification, usually a passport or a photocard driving licence
• Proof of your address, such as a recent bank statement or council tax bill
• An electronic identity check, often through an app or a link, in which you photograph your identification and take a picture of yourself

Everyone buying needs checking, and so does anyone giving you money towards the purchase. On a sale, the seller's conveyancer checks that the seller is who they say they are and owns the property, which protects buyers from someone selling a home that is not theirs.

Showing where your money comes from

Your conveyancer will ask how you are paying for the home, and for evidence of each part. For example:

• Savings: bank statements showing how the money built up, often over several months
• A mortgage: your mortgage offer, which the lender sends to your conveyancer as well
• The sale of a home: the completion statement from your sale, and the money arriving in your account
• A gift from family: a letter from the giver confirming it is a gift and not a loan, with their own identity and source of funds checks; see gifted deposits, Lifetime ISAs and Help to Buy ISAs
• An inheritance: the will or the estate accounts, and the money arriving
• Investments, a bonus, a divorce settlement, money from abroad or from cryptocurrency: the paper trail that shows it. Tell your conveyancer early, as these can take longer to check

The firm needs to see the money's journey to you, not only that it is in your account now. If you plan to move money between accounts before completion, tell your conveyancer first.

Why it can feel like a lot

Property is a known target for money laundering and fraud, so the rules expect law firms to understand each transaction, not only to tick boxes. A firm may ask about a large payment into your account or a change in your plans, and it may need to see more where money comes from abroad or from a business. Your mortgage lender has requirements of its own, which your conveyancer checks for it.

None of this means you are under suspicion. Answering promptly, with complete documents, is the quickest way through.

Keep your money safe from fraud

Fraudsters target people moving home, because large sums move at predictable times. The most common scam is an email that looks as if it comes from your conveyancer, saying its bank details have changed. The National Crime Agency and the Law Society, in their campaign against payment diversion fraud, advise you to check by phone before you send money, to test the account with a small amount first, and never to send money until you are sure the details are right. In practice:

• Get your conveyancer's bank details at the start, in person or by phone, not by email
• Treat any message saying the bank details have changed as suspicious, however genuine it looks
• Before you send money, call your conveyancer on the number on its website or its letter, not one given in an email
• Send a small amount first, and check it has arrived, before sending the rest

If you think you have sent money to a fraudster, call your bank at once and ask it to contact the receiving bank to freeze the money, then tell your conveyancer. In England, Wales and Northern Ireland you can report it to Report Fraud, which replaced Action Fraud, or on 0300 123 2040.

Once the home is yours

In England and Wales, HM Land Registry's free Property Alert service emails you when certain activity happens on a property you monitor, such as an application for a new mortgage, so you can act quickly if it is not you. You can monitor up to 10 properties, and it is most worthwhile for a home you let or leave empty.

Checklist: what to have ready

• Your passport or photocard driving licence, in date
• A recent bank statement or council tax bill showing your address
• Statements for the accounts your money is in, going back several months
• Your mortgage agreement in principle, then your mortgage offer
• The details of anyone giving you money, and their agreement to be checked
• Evidence of anything else you are using: a sale, an inheritance, investments or money from abroad

Next steps

Instruct your conveyancer as soon as your offer is accepted, and send what it asks for straight away. Get an instant conveyancing quote to see your costs in full, including any identity check fees, and read the conveyancing process for what happens when.