If you are buying a property, you may be surprised when your solicitor asks you to provide bank statements, savings evidence, or details of where your money has come from.
Many clients ask us this question, particularly if they have already provided identification documents. These requests can sometimes feel intrusive. However, they are a legal requirement for solicitors and form an important part of preventing financial crime.
Below we explain what proof of funds means, why we ask for it, and what documents you may be asked to provide during the conveyancing process.
What is proof of funds?
Proof of funds simply means evidence showing that you have the money available to complete your transaction.
As solicitors, we must be satisfied that the funds you are using are genuine, legitimate, and available when needed.
This usually involves providing documents such as recent bank statements or savings account statements. The exact documents required will depend on your personal circumstances and how your purchase is being funded.
What is “source of funds” and “source of wealth”?
You may also hear solicitors refer to source of funds and source of wealth.
Source of funds explains where the money for the specific property transaction is coming from, for example:
- savings built up over time
- proceeds from the sale of another property
- a gift from family
- funds held in an investment account
Source of wealth explains how you originally accumulated your money, such as through:
- employment income
- business profits
- investments
- inheritance
Depending on the circumstances of your transaction, we may need to understand both.
Why do solicitors ask for this information?
Solicitors are regulated professionals and must comply with strict anti-money laundering regulations.
These rules require law firms to carry out checks to ensure that money used in property transactions does not come from criminal activity. Unfortunately, property purchases can sometimes be used to launder money, which is why conveyancing transactions are closely monitored.
As a result, solicitors must not only verify the identity of their clients, but also:
- understand the source of funds being used
- check the legitimacy of the transaction
- report suspicious activity where necessary
What should you do to be prepared?
We will usually ask for proof of funds information at the start of the transaction, when your file is opened, and may request further documents as the matter progresses.
Providing this information early can help avoid delays later in the process, particularly when you are approaching exchange of contracts.
All information provided to us is handled confidentially and securely in accordance with data protection laws and regulatory requirements.
To help your transaction proceed smoothly, it is helpful to:
- provide documents promptly when requested
- ensure statements clearly show your name and account details
- explain any large or unusual payments into your account
- inform us if any funds will come from third parties
Requests for proof of funds are not a reflection of mistrust. They are a necessary part of the legal process designed to protect both clients and the wider property market.
If you are buying or selling a property and have questions about proof of funds, our conveyancing solicitors at Andrew & Andrew Solicitors will be happy to guide you through the process and explain what is required.
Our team advises clients across Hampshire, including Portsmouth, Emsworth, Wickham and the surrounding areas, on all aspects of residential conveyancing. If you have any questions about the conveyancing process, please contact our team and we will be happy to help.