Why is our solicitor so unreasonable and intrusive?

[Alexiaa]

Hello,

I think I'm posting in a wrong section but I really need as many answers as possible.. So... Me and my partner are buying a house in Scotland. Offer accepted, mortgage offer received, purchase should be completed after 5 days. However… Last Friday our solicitor asked for bank statements showing the money with which we will fund our purchase. We sent them to him, and now he is having a problem with a credit to my account made at the end of July. The credit is 2500 pounds. This money originally came from my partner’s uncle who lives in the USA. So the uncle sent the dollars to my partner’s brother, my partner’s brother then sent it to my partner, my partner converted dollars to pounds and then sent them to me. Here are my questions:

1. The dollars were originally a birthday gift for my partner; after receiving it we went on holiday and spent about 2000 pounds already, so just a small portion of this money is now left. We can very easily fund our purchase even without the uncle’s money because we have nearly a six-figure sum in savings. We have explained everything to our solicitor, we said like ‘we have lots of savings, these couple thousands do not even matter, we were never going to fund our purchase with it, it was for holidays…’ but the solicitor kind of refused to hear it and asked to see my partner’s bank statement showing him sending the money to me and his brother sending the money to him. He also asked to see brother’s bank statement and requested that his brother signed a gifting paper. Also, the solicitor was even upset as to 'why we waited until the last minute to inform him about receiving any gifts.' But it has nothing to do with the purchase, come on... :(

1. My partner’s brother provided his bank statement and signed gifting papers; what would have happened if he had point blank refused? Also, he originally received the money from the uncle living in the USA, so will the uncle have to sign gifting papers even though he never sent anything to my partner directly? Is this money legally a gift from the uncle or from my partner’s brother? Tomorrow is Monday, so the solicitor will be open and we don't know what to expect.

1. Our completion date is September 9th and the uncle is not in the USA at the moment, so he cannot go to a lawyer there and sign anything; he is flying back home only September 25th. What will happen if we are asked to provide any documents from the uncle but are unable to? The uncle is old and has never used any online banking, he just has a couple cards; if he wants statements, he must go to a branch to get them printed, and now it is impossible of course.

Money laundering. That's why they are doing it.

I'm sure it does feel intrusive, but it is necessary as it is the law, and the consequences of them failing to follow it properly are severe.

Hi OP. Proof of funds is something that is normally asked for in the beginning not at this late stage. In fact when I bought a house last year it was one of the first things asked for by the estate agent as well as the solicitor. It is to do with money laundering regulations as PP suggested but you're so far down the line this should have already been cleared. 2.5k for a purchase which is presumably a much larger amount shouldn't make that much of a difference. If you have the paper trail anyway you should be OK. Did the money come in after your offer or a few months before?

Also you may need a letter from your uncle re gifting but usually a letter is because auch larger amount is being gifted. For example 300k ir something

Yep, need full cash trails I’m afraid for ML.

We had recently who refused to say where their funds to purchase originated from. “We’re rich” was their response! Not good enough I’m afraid!

Had one recently*

To echo everyone else, yes we had to prove where our deposit had come from when we bought our home (we'd saved up over a few years). Our solicitor is best friends with my in laws and have been friends with them 30 plus years, we still had to go through all the checks even though he knew we werent money laundring. I wouldn't have wanted a large cash gift like that on my bank statement right before buying if it wasn't needed for the purchase, it is obviously going to raise questions especially it moving through so many accounts. You should have waited until after the purchase to receive the gift, I think you were naive to not realise this would be an issue.

It's Money Laundering Regulations. Solicitors have to show due diligence with regards to source of funds, especially with house purchases as this is one of the main ways money is laundered. If there is anything that looks out of the ordinary they have to investigate and get the proper background.

If audited and they don't have the paper trail the money laundering officer from the firm can be put in prison. It can and does happen.

Well, every time the uncle sends money, it first goes to my partner's brother, then this brother sends everyone their equal shares; I mean, to my partner, to his sisters, to their mum and so on. So the money passes several accounts sometimes. Nobody has ever had a problem.

Also, as the uncle is childless, he is planning to leave his house and savings to his nephews and nieces. Since none of them have the right to live in the USA, probably the house will have to be sold and the money moved to UK accounts. So does this mean that the whole family will then become money launderers? It is unlikely I believe; or is it best not to accept inheritance and let it top up the state budget of the USA?

Proof of funds is one thing but that money trail would raise red flags all over.

I would certainly have had to flag it to my compliance team for further investigation and permission to handle the transaction and that takes time.

Who on earth go through such a convoluted process if there is nothing to hide? It looks as suspicious as they come and is straight out of the AML training videos as a prime example of layering.

Yeah, this is just him covering his arse re money laundering regs.

He could get into a lot of trouble if he allowed you to skip jumping those hoops.

I feel your pain op. My DD has just purchased a house and this has been her biggest problem providing all of this information.
She nearly lost her house because the solicitor asked for this information a week before they were due to move despite being under instructions for 16 weeks.

You are taking this so personally. It’s standard AML procedure.

He’s not being intrusive he’s just following the law .

YABVU to complain that you don’t have time to sort out the paperwork, and in the same OP query why the solicitor is upset that you only told him about the gift last minute. This is a situation of your own making 😂.

The only way he’d be at fault would be if he hadn’t asked you for the paperwork at the start but I doubt that’s the case as UK resi solicitors work on very low margins and the process / forms are all standardised

Exactly this - if the problem is he’s only just asked for the information then you can justifiably complain. Otherwise this is on you

No, of course not. No one is saying you are money launderers, PPs are saying it looks like money laundering and the solicitor has to check.

What your family is doing is not money laundering because the money is not, I assume, the proceeds of crime.

You know that.
However, your solicitor does not know that and legally cannot just take your word for it. They need a paper trail.

In your case it's a gift. Fair enough. Nothing wrong with that.

Your solicitor doesn't want to risk a fine, jail and a criminal record and needs to be able to show they followed the law.

You agree I'm sure that that's perfectly reasonable?

I'm a solicitor and as others have said, this is to do with AML regs. Solicitors are obliged both by the law and our professional code of conduct to satisfy ourselves of the course of funds. Although you may not be using the gift towards the house, if having the gift enabled you to put other money towards the house, that could be indirect use of laundered funds.

It's nothing intrusive, it's just a legal requirement the solicitor has to meet.

So the uncle sent the dollars to my partner’s brother, my partner’s brother then sent it to my partner, my partner converted dollars to pounds and then sent them to me.

I don't think a gift of 2500 would raise any eyebrows since you've presumably already provided proof of funds, and your solicitor is just doing their job, but this circuitous trail is definitely the kind that sends alarms ringing, even though the amount is relatively small. A transfer to your partner's account from an outside account in foreign currency, change of currency, transfer to yours. Why not just keep it in his account and have him pay for the holiday?

Nope. Absolutely 100% doing his job.

he’s the kind of solicitor you want. Takes notice of all details. Dots the i’s and crosses the t’s

better he do his job properly than you have a problem legally further down the line. Any they will be a lot more intrusive then

Sending a larger sum to one family member overseas for division and distribution to other family members is not unusual.

However if you are entering into a larger financial transaction you need the paper trail and statements to confirm that is what is happening and that its all above board. That is normal if frustrating.

If your uncle is planning to leave an inheritance of any size to family overseas then I recommend both sides get estate tax planning advice on likely tax liabilities on both sides of the borders. There are taxation agreements between countries to mitigate double taxation but you have to plan/apply for them.

Banks check also. When the time eventually comes for the house proceeds to be transferred to the UK, you would be best letting the bank here know beforehand and provide them with copies of the US Will, notary correspondence etc. If the money just starts to hit your account some algorithm could freeze your account and if a SAR is made they will not correspond with you for several months.

I had to do this with a gift I gave my son while he was buying his house. It was towards the cost of a kitchen refit but I transferred it before the sale was completed and the mortgage lenders wanted proof that it was a gift and not a loan. As they were not local to me, I was unable to take the necessary documentation in person so had to get it notarised. Fortunately I discovered that certain Post Offices are licensed to do this so it was not as expensive as going to a solicitor so still a nuisance.

when I was giving my daughter a similar amount after she bought her house, I made sure I waited to transfer it after the purchase was completed!

They’ve never had a problem because presumably they weren’t buying a house at the time?

you aren’t laundering money, great. A solicitor has to CHECK that and it’s made more complicated by transactions like that. What aren’t you getting?

Op I think you are misunderstanding.

PP have already explained that the solicitor was asking these questions to comply with AML regs. Uncle being childless, money being sent to his mum etc is a completely moot point as unless your partners mum is also buying a house (and will have to go through the same procedures) generally she doesn't have to prove that the money in her account isn't laundered and has a clear origin.

No one is calling your partners family money launderers, it's just been pointed out that moving money around as your partners family have done could be viewed as suspicious. You know full well it isn't, so it's fine.