When Does a Solicitor Check Proof of Funds UK

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When buying or selling property, solicitors are legally required to check proof of funds to comply with anti-money laundering (AML) regulations. This verification ensures that the money used in a transaction comes from legitimate sources. Checking proof of funds protects both the client and the solicitor from potential financial crime and helps maintain transparency throughout the conveyancing process. Understanding when and why these checks take place can help buyers prepare the right documentation early and avoid delays in completing their purchase.

Why Solicitors Need to Check Proof of Funds

Proof of funds checks are a legal requirement under the UK’s anti-money laundering legislation. Solicitors must verify the origin of funds to prevent the use of illegally obtained money in property transactions. The checks also help confirm that the buyer can genuinely afford the purchase.

For solicitors, failing to carry out these checks correctly can lead to serious penalties, so firms take them very seriously. The process is not about questioning the client’s finances but about fulfilling legal obligations designed to protect all parties.

When the Check Happens

Solicitors typically check proof of funds early in the conveyancing process, shortly after being instructed to act on behalf of the buyer. The request usually happens before the solicitor begins official work on the transaction or before any deposit is transferred.

There are several key points in the process when verification may occur:

1. When the Offer Is Accepted
Once a buyer’s offer is accepted on a property, their solicitor will contact them to begin legal checks and request proof of funds. Providing this information early ensures there are no obstacles when contracts are ready to be exchanged.

2. Before Exchanging Contracts
The solicitor must confirm that funds for the purchase, including the deposit and balance, are available and traceable before contracts are exchanged. This step is vital to ensure both compliance and a smooth transaction.

3. When Large Transfers Are Made
If funds are being transferred from multiple accounts or third parties, the solicitor will verify the origin of each source before completing the transaction. This step helps prevent any suspicion of money laundering or financial irregularities.

What Counts as Proof of Funds

Solicitors accept various forms of documentation as proof of funds, depending on how the buyer is financing the purchase. Acceptable evidence includes:

• Recent bank or building society statements showing available funds

• Savings or investment account statements

• Proof of sale from another property

• A mortgage offer or agreement in principle (for financed purchases)

• Gift letters confirming funds from family members, supported by the giver’s financial evidence

• Inheritance or trust documentation where applicable

The documents must show the buyer’s name, the amount available, and, where possible, the source of the funds. Solicitors may ask for multiple documents to verify that the money has been legally obtained and has a clear audit trail.

Tracing the Source of Funds

It’s not enough for buyers to simply show they have the money available. Solicitors must also understand where the funds originated. This means tracing the source, whether it’s savings, an inheritance, or proceeds from a previous property sale.

If the funds have come from long-term savings, bank statements covering several months or years may be required. Where inheritance or a gift is involved, solicitors will need documents showing the transfer of money and proof that it came from a legitimate account.

For property chains, solicitors may also verify that the sale of a previous property has completed and that the proceeds have been deposited correctly.

Proof of Funds vs Proof of Deposit

It’s common for buyers to confuse proof of funds with proof of deposit. Proof of deposit is simply evidence that the buyer has the initial amount required to secure the property. Proof of funds, on the other hand, covers the full purchase price and any associated costs.

Solicitors will typically ask for both types of documentation, especially when a mortgage is involved. The lender will want confirmation that the deposit is genuine, while the solicitor must verify that all funds used in the transaction are legitimate.

What Happens If Proof of Funds Is Delayed

Delaying or failing to provide proof of funds can slow down the conveyancing process and may even put the property purchase at risk. Solicitors cannot proceed with key legal steps—such as exchanging contracts—until these checks are complete.

If documentation is missing or unclear, the solicitor may ask for additional evidence or clarification. In rare cases, if funds appear suspicious or cannot be verified, the solicitor is legally obligated to report the issue to the authorities without informing the client directly, as required under AML rules.

To avoid such issues, buyers should prepare proof of funds as soon as they start the homebuying process. Having all documents ready allows the solicitor to complete checks quickly, keeping the transaction on schedule.

How Long Do Proof of Funds Checks Take

The time it takes to verify proof of funds depends on how straightforward the buyer’s finances are. For most transactions, it can be completed within a few days once the necessary documents are submitted.

However, if funds come from multiple sources, international accounts, or third parties, the process may take longer. Providing clear, organised records upfront is the best way to avoid unnecessary delays.

The Importance of Transparency

Solicitors appreciate transparency from clients when it comes to financial verification. Open communication helps the process run smoothly and builds trust. Clients should never attempt to conceal sources of funds or provide partial information, as this may trigger compliance concerns.

Being proactive—by providing full details of where the money comes from and preparing all supporting documents—helps both the solicitor and the client complete the transaction without complications.

Practical Tips for Buyers

1. Start gathering financial documents as soon as you begin your property search.

2. Ensure all statements are recent and clearly show your name and account details.

3. If funds are gifted, ask the donor to prepare proof of their financial capacity.

4. Keep copies of any legal or tax documents related to inheritance or property sales.

5. Provide everything promptly when your solicitor requests it.

These steps will help prevent delays and demonstrate compliance with legal requirements.

Final Thoughts

Solicitors check proof of funds early in the property buying process to meet anti-money laundering regulations and ensure a secure transaction. Providing the right documents promptly not only keeps the process moving smoothly but also reassures all parties that the transaction is transparent and legitimate.

For buyers, being prepared is key. Understanding what solicitors need and when they need it allows you to move forward confidently, knowing your purchase is fully compliant and protected from potential risks.

Also see when is it too late to change solicitors and when to instruct a solicitor when selling a house. More at our Solicitors Hub.