Your client calls, frustrated: “We’re meant to complete Friday but the solicitor says they need more documents. The seller’s threatening to pull out. Can you help?”
Property transactions collapse because of AML documentation gaps. When solicitors request additional evidence at the last minute, clients blame everyone involved including their accountant who “should have warned them.”
This guide explains MLR 2017 requirements for property transactions, what triggers enhanced due diligence, and exactly what documentation solicitors need.
Key Points Summarised for Busy Readers
- All UK solicitors and conveyancers must conduct AML checks before handling property transactions under MLR 2017
- Property transactions receive enhanced scrutiny compared to standard accounting services due to high money laundering risk
- Solicitors verify identity, address, source of funds, and source of wealth for every party to the transaction
- Cash buyers face additional verification requirements including detailed source of wealth declarations
- Gift deposits require full verification of donors including their identity, address, and source of funds
- Checks must be completed before contracts are exchanged, creating potential transaction delays
- Missing or inadequate source of funds evidence is the primary cause of delayed property transactions
- FigsFlow enables solicitors to complete comprehensive property AML checks in under 5 minutes with automatic documentation
Why Property Transactions Require Enhanced AML Checks
Money Laundering Regulations 2017 apply to all legal professionals, but property transactions receive heightened scrutiny that your accounting clients won’t experience in their relationship with you. Solicitors and licensed conveyancers face civil penalties of up to £5 million for the most serious breaches, though typical penalties are substantially lower. Personal penalties may also apply to compliance officers.
Property transactions present specific characteristics that elevate money laundering risk under MLR 2017. High transaction values allow criminals to launder substantial sums in a single purchase. The UK property market accommodates cash buyers without triggering the same scrutiny as equivalent cash transactions in other sectors. Ownership through corporate structures or trusts can deliberately obscure who ultimately controls the property. International buyers purchasing UK property may use funds sourced from jurisdictions with weak financial controls. The National Crime Agency has reported that billions of pounds are estimated to be laundered through UK property, making residential and commercial conveyancing a priority enforcement area.
Property Transaction Risk Classifications:
Who Gets Checked in a Property Transaction
Every person or entity involved in a property transaction must be verified. This ensures compliance with anti-money laundering laws and confirms that all parties are legitimate. The table below sets out who is checked and to what extent.
Under the Money Laundering Regulations 2017, solicitors must carry out these checks independently and cannot rely on information collected by other professionals or third parties.
What Information Solicitors Must Collect & Verify
Solicitors must independently verify identity, address, and the full source of funds for every property transaction, as required under the Money Laundering Regulations 2017.
Identity Verification
Only official government-issued documents are accepted. These include a valid UK or international passport, a full UK photocard driving licence, a national identity card from an EEA country, or a biometric residence permit. Expired documents, birth certificates, provisional driving licences, and employee ID cards are not accepted.
Address Verification
Proof of address must be recent, generally issued within the last three months. Acceptable documents include a bank or building society statement, credit card statement, utility bill for gas, electricity or water, council tax bill, mortgage statement, or HMRC correspondence.
Source of Funds Verification
This is where property transactions differ substantially from accounting service AML checks. Solicitors must trace the origin of every pound used in the transaction. They must confirm not only that funds exist, but also how they were accumulated, ensuring a clear and legitimate financial trail.
Solicitors are required to go beyond confirming that money is available. They must verify that it comes from legitimate and identifiable sources.
The AML Check Process in Property Transactions
Anti-money laundering (AML) checks in property transactions are more rigorous than in accounting. Solicitors cannot begin any legal work until all verification steps are fully completed.
Stage 1: Initial Instruction
When a solicitor is instructed, AML verification begins immediately. Clients receive a document request for identity, address, and source of funds evidence. The solicitor cannot open or progress the file until these checks are complete.
Stage 2: Document Collection
Clients provide the required documents for verification. The solicitor reviews them for validity and completeness, requesting any missing or unclear information. Most delays occur at this stage when clients are unprepared or documents are incomplete.
Stage 3: Verification & Screening
Identity documents are verified through in-person meetings, electronic identity verification services, or video verification meetings. Source of funds documentation is reviewed for consistency and adequacy. The solicitor also carries out a full risk assessment and performs sanctions and politically exposed person (PEP) screening for all parties involved.
Stage 4: Enhanced Due Diligence
If the transaction is considered high risk, additional checks are required. These may include a detailed source of wealth declaration, verification of beneficial owners in company or trust structures, senior management approval, and adverse media searches.
Here are some common triggers that may require enhanced due diligence:
- Cash purchases beyond certain threshold
- Funds from overseas accounts or entities
- Complex ownership structures using companies or trusts
- Client reluctance to provide full information
- Unusual or urgent transactions without clear reason
- Identification of a PEP
- Inconsistent information between documents
- Recent large cash deposits before purchase
Stage 5: Approval & File Progression
Once all checks are complete, a senior solicitor reviews and approves the file. Legal work can then proceed, and the solicitor continues to monitor for any changes or new risks throughout the transaction.
What Happens If Clients Fail AML Checks
Solicitors are subject to strict legal prohibitions under the Money Laundering Regulations. If clients fail AML checks, the solicitor is often unable to continue acting, regardless of circumstances. The table below outlines the main reasons transactions fail or are delayed and the typical consequences.
Common failure scenarios include gift deposits where the donor refuses verification or cannot explain their source of funds, and unexplained cash accumulations such as large deposits before purchase or business cash sales without records.
How FigsFlow Revolutionises Property AML Checks for Solicitors
FigsFlow automates the entire AML check process, allowing solicitors to complete full verification in under five minutes with automatic documentation that proves compliance. It replaces manual checks, chasing clients via email, and spreadsheet tracking with a seamless, secure digital workflow.
Automated Document Collection
Clients receive a branded, secure portal to upload documents directly from any device. No more email chains with missing attachments or illegible photographs. Documents arrive in a centralised location where you can review and extract the necessary information efficiently, eliminating the back-and-forth that typically delays property transactions by days.
Companies House Integration
Enter a company number and FigsFlow retrieves all current registered company details instantly. When buyers purchase through limited companies, you can verify corporate information in seconds rather than manually navigating Companies House records and copying details into your case management system.
Comprehensive Sanctions & PEP Screening
FigsFlow screens all clients, beneficial owners, and directors against major UK and international sanctions and PEP lists. The system continuously re-screens your entire client base whenever these lists are updated daily, ensuring ongoing compliance without manual effort. This catches sanctions additions that manual processes inevitably miss.
Guided Risk Assessment
Built-in templates guide you through each AML risk factor and automatically generate a risk score with clear written rationale. This reduces subjectivity between fee earners and ensures regulatory consistency across all property transactions, regardless of who handles the file.
Complete Audit Trail & Ongoing Monitoring
Every AML action is recorded with timestamps for a verifiable audit trail. You can export compliance reports instantly for HMRC inspections, set automated review schedules, and receive alerts when documents or checks are due for renewal. This eliminates the retrospective documentation work that consumes 15 minutes per party under manual systems.
Beyond AML Compliance
FigsFlow also handles proposals, engagement letters, and pricing in a single integrated platform. It is the only software that manages the entire client onboarding and compliance workflow from first contact through ongoing relationship management.
Want to see how FigsFlow transforms property transaction AML compliance?
Book a personalised demo and we’ll show you exactly how the system handles document collection, sanctions screening, risk assessment, and audit trails for all transaction parties. See how solicitors are cutting AML processing time by 80% while maintaining full MLR 2017 compliance.
Additional Resources
- Money Laundering Regulations 2017 – Money Laundering Regulations 2017: consultation – GOV.UK
- HMRC Customer Due Diligence Guidance – ECSH33335 – Enhanced due diligence – HMRC internal manual – GOV.UK
- Complete Guide to AML Software for Accountants –Complete Guide to AML Software for Accountants, Bookkeepers & Tax Advisors | FigsFlow
- Why Accountants Should Prioritise AML – AML & KYC Compliance: Accountants Must Prioritise | FigsFlow
- Difference Between KYC & AML – Difference Between KYC & AML: What You Need to Know | FigsFlow
Conclusion
Your clients will push for exchange when documentation remains incomplete. They will tell you the seller is threatening to accept another offer. They will ask you to “just proceed” and sort the verification afterward.
You cannot. MLR 2017 prohibits proceeding without adequate customer due diligence, and the consequences fall on you personally as well as your firm.
FigsFlow removes the tension between compliance and client service speed. Complete AML checks for all transaction parties in under five minutes means you never cause the delay that collapses a transaction chain. Automated sanctions screening catches matches that manual searches miss. Instant compliance reports demonstrate you maintained standards even under exchange pressure.
Ready to eliminate AML delays from your property transactions?
Try FigsFlow free for 30 days and see how you can complete full verification in under five minutes while maintaining complete MLR 2017 compliance. No credit card required.
Frequently Asked Questions
Manual property AML checks require 30 to 45 minutes of solicitor time per party when conducted properly. Document collection usually takes 1 to 7 days, with delays when clients provide inadequate information. FigsFlow reduces solicitor verification time to under 5 minutes per party, though client document provision still determines overall timeline.
Clients need government-issued photo ID (valid passport or UK photocard driving licence), proof of address within three months (bank statement, utility bill, council tax bill), and comprehensive source of funds documentation. Source requirements vary: savings need 3-6 months bank statements plus income proof, gift deposits require donor verification and donor’s source explanation, cash buyers need source of wealth declarations.
Yes. Cash purchases receive enhanced scrutiny as higher money laundering risk. Cash buyers over certain threshold must provide source of wealth declarations explaining overall asset accumulation, business ownership documentation, employment history verification, and detailed explanations for large cash holdings. The verification process takes 2 to 4 weeks longer than mortgaged purchases due to enhanced due diligence requirements.
Solicitors generally cannot commence legal work before completing AML verification under MLR 2017, though Regulation 27 permits limited preliminary work in certain low-risk circumstances where CDD will be completed as soon as practicable. In practice, most firms prohibit any work until checks complete.
Solicitors must immediately refuse the instruction or terminate the relationship. The UK operates absolute prohibitions against providing any services to sanctioned individuals. No exceptions exist regardless of circumstances. The solicitor must report the attempted instruction and cannot explain why to the client. Clients believing they’re wrongly matched must contact OFSI directly for official clearance.
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