AML Checks When Buying or Selling a House (UK Guide)

AML checks when buying or selling a house in the UK are a legal requirement under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. These checks apply to all property transactions and must be carried out by regulated professionals involved in the deal.

This guide explains what AML checks involve, who must carry them out, the documents required, and what happens if checks are not completed properly.

What Are AML Checks in Property Transactions?

AML checks in property transactions are the verification procedures that solicitors, estate agents, and other regulated professionals must carry out to confirm the identity of buyers and sellers, and to verify the legitimacy of funds being used in the transaction.

These checks are designed to prevent money laundering through the UK property market, which remains one of the highest-risk sectors for financial crime.

The checks typically include:

• Identity verification (passport, driving licence)
• Proof of address (utility bill, bank statement)
• Source of funds verification
• Source of wealth verification (where applicable)
• PEP and sanctions screening
• Beneficial ownership identification

Who Must Carry Out AML Checks?

Under the MLRs 2017, the following professionals are required to carry out AML checks in property transactions:

• Solicitors and conveyancers
• Estate agents and letting agents
• Accountants involved in property transactions
• Mortgage brokers
• Tax advisers advising on property matters

Each professional involved in the transaction must carry out their own checks. A solicitor cannot rely on checks carried out by the estate agent, and vice versa.

AML Checks When Buying a House

Identity Verification

Buyers must provide government-issued photographic identification (passport or driving licence) and a separate proof of current address dated within the last three months.

Source of Funds

The buyer must demonstrate where the money for the purchase is coming from. This includes:

• Mortgage offer letter
• Bank statements showing savings
• Evidence of property sale proceeds
• Gift letters and donor identification where funds are gifted
• Investment portfolio statements
• Documentation of inheritance

Source of Wealth

In higher-risk cases, the professional may also need to verify the source of the client’s overall wealth, not just the specific funds for this transaction. This applies particularly to high-value purchases, cash buyers, or clients connected to high-risk jurisdictions.

PEP and Sanctions Screening

All buyers must be screened against PEP lists and international sanctions lists. This applies to the buyer, any beneficial owners, and any persons with significant control.

AML Checks When Selling a House

Sellers are also subject to AML checks, though the focus differs from buyer checks.

The seller must provide:

• Photographic identification
• Proof of current address
• Proof of ownership (title deeds or Land Registry documentation)
• PEP and sanctions screening

The key difference is that sellers do not typically need to demonstrate source of funds, since they are receiving money rather than providing it. However, if the property was acquired in circumstances that raise concerns, additional checks may be warranted.

Enhanced Due Diligence in Property Transactions

Regulation 33 of the MLRs 2017 requires enhanced due diligence in certain higher-risk situations. In property transactions, enhanced checks are triggered by:

• The client is a PEP or a family member or close associate of a PEP
• The client is connected to a high-risk third country
• The transaction involves unusually large amounts or complex arrangements
• The transaction has no apparent economic or legal purpose
• The client is a cash buyer with no clear source of funds
• Beneficial ownership is difficult to establish

Enhanced due diligence requires more detailed verification of identity, source of funds, and source of wealth. It may also require senior management approval before the transaction can proceed.

What Documents Are Required for AML Property Checks?

For Individuals

• Valid passport or UK driving licence (photographic ID)
• Utility bill or bank statement dated within 3 months (proof of address)
• Mortgage offer letter or bank statements (source of funds)
• Gift letter with donor ID and source of gift funds (if applicable)
• Evidence of inheritance (grant of probate, solicitor confirmation)

For Companies

• Certificate of incorporation
• Companies House filings showing directors and shareholders
• Identification of all beneficial owners holding 25% or more
• Photographic ID and proof of address for each beneficial owner
• Evidence of the company’s source of funds for the transaction

For Trusts

• Trust deed
• Identification of all trustees
• Identification of settlors and beneficiaries
• Source of trust funds

How Long Do AML Checks Take?

Electronic identity verification can be completed in minutes. Source of funds verification depends on how quickly the client provides supporting documentation. In straightforward cases, complete AML checks can be finished within 24 to 48 hours.

Delays typically occur when clients are slow to provide documentation, when source of funds is complex (multiple sources, overseas funds, gifts from multiple donors), or when enhanced due diligence is required.

What Happens If AML Checks Are Not Completed?

If AML checks cannot be satisfactorily completed, the regulated professional must not proceed with the transaction. Under Regulation 31 of the MLRs 2017, and per guidance covered in our Suspicious Activity Report guide, the firm must:

• Refuse to establish the business relationship
• Terminate any existing relationship where checks cannot be completed
• Consider whether to file a Suspicious Activity Report (SAR) with the National Crime Agency

Failure to carry out adequate AML checks is a criminal offence. Penalties include unlimited fines and, in serious cases, imprisonment.

How FigsFlow Helps with Property AML Checks

FigsFlow provides automated AML and identity verification tools designed for UK accounting and legal professionals handling property transactions, building on the same Companies House identity verification checks used for company clients.

• Electronic identity verification against government databases
• PEP and sanctions screening
• Secure document collection portal for source of funds evidence
• Timestamped audit trails for regulatory compliance
• 7-year secure storage of all verification records

Frequently Asked Questions