Source of Funds Requirements
As detailed on our identification requirements page, by law, and as part of our security and risk management procedures, we must obtain satisfactory evidence of the identity of our clients and sometimes people associated with our clients.
We also have further obligations under the Money Laundering Regulations to be satisfied as to the origin and legitimacy of any funds a client intends to provide to fund their transaction. We will require information and (in many cases) supporting evidence from you, and any third parties associated with your transaction, of where the funds you intend to use have originated from; it is not sufficient to simply demonstrate that you have the funds in a bank account.
In most cases this process will be straightforward. However, in order to assist you with gathering this evidence together, we have outlined below some of the different types of source of funds that may be applicable and the information and evidence that we usually require in each case.
Depending on the circumstances of your matter, we may also be required to investigate and evidence the origin of your total wealth, or that of a third party providing any funds on your behalf.
If there is any delay in providing this information to us then your matter might be delayed.
IMPORTANT: Crypto Currency
TSP is not able to act for you in your transaction if any part of the funds you are using for your transaction are the result of investment in Crypto Currency. If you do not tell us at the beginning of your matter and we become aware of this information during the course of your transaction then we will need to decline to act at that point and you will be responsible for the costs that have been incurred on your matter.
Evidencing Your Source of Funds
We have detailed below the most common source of funds that we come across and the typical evidence that we may require from you in each situation. Each client and transaction is different so, in some circumstances we may require additional information from you. Please do not be offended if this is the case.
Please remember that we are required by law to evidence your source of funds. This requirement applies to all of our clients where funds are involved. We are not permitted to accept any funds from you, for use in your transaction, until we are satisfied that we have sufficient evidence.
This is by far the most common source of funds that we come across. It is important that you are able to evidence income that justifies the amount saved, whether from employment, rental income, or pension. For example, an individual who earns £1000 per month is unlikely to accrue savings from income of £300,000. We will generally require
- Bank statements that evidence that you have the full amount of funds. Funds may be in more than one account, including a Help to Buy ISA, and we will need to see bank statements for each account
- Evidence of the source of regular income into those accounts eg 3 months’ payslips if from employment for example
- Bank statement evidence (usually 3 months) that shows that regular pattern of income being received and, if transferred to a savings account, evidence of funds being transferred either regularly or accruing in a current account and then being transferred to savings
Help to Buy ISA (Property Transactions)
There is a specific process for claiming the Help-to-Buy Bonus and therefore it is imperative that you inform us from the outset if you have a Help-to-Buy ISA. Failure to do so may mean that we do not receive your bonus in time for the completion date, which may mean we are unable to complete your purchase.
If we are acting in the sale of your property and you are using the proceeds of this sale to fund your purchase, we will not require any evidence of source of funds from you. However, if you have already completed your sale, or your funds are from a transfer of equity on which Thompson Smith and Puxon did not act, then we will require
- A Bank Statement showing the funds arriving in your account. If the statement clearly shows the funds arriving from a Solicitor’s practice we will not require any further evidence. If the statement is not clear we will need correspondence evidence / completion statement from the firm that acted in the transaction
Mortgage / Re-mortgage
If you are purchasing a property with a mortgage then it is likely that we will also be representing the lender. If this is the case, we will receive a copy of your mortgage offer directly from you lender and will not require any further information from you.
Sometimes a lender will instruct a different firm of Solicitors. If this is the case we will liaise with them and again, we will not require any further evidence from you.
If however you are re-mortgaging a property we will need to see evidence of the re-mortgage paper work and evidence of the funds arriving, from the lender, in your bank account.
Please provide written evidence from the Solicitor’s practice handling the Estate of the Deceased and evidence, by way of a bank statement, of the funds arriving in your bank account from that firm of Solicitors. If the Probate was conducted privately, without the assistance of a firm of Solicitors, we will require the following evidence
- Grant of Probate
- Copy Will
- Evidence of funds being received into your bank account from an executor named in the Grant of Probat
Where funds are from a divorce settlement we will require
- Information regarding where the funds are currently held – this may be a Bank statement
- Name of solicitors acting/ who acted for you
- Copy of any financial Court Orders or correspondence from the solicitors confirming the settlement.
Bonus / Redundancy payments / Share Dividends
If you received a lump sum bonus or redundancy payment from an employer or a share dividend from a company you have shares in, we will require one of the following
- A payslip showing the payment
- A letter from your employer / company detailing the bonus / redundancy / dividend payment
- A bank statement clearly showing the funds being paid into your account
Sale of Assets - Stocks and Shares / Premium Bonds
If you are selling / have sold shares or premium bonds to fund your transaction we will require
- Up to date, written evidence of their value at sale and details of how and when you acquired the asset originally
- Evidence of the sale / disposal of the asset
- A bank statement showing evidence of the funds from the sale arriving in your bank account
Payments received from Insurance Policies / Pension Lump Sum Payments
If the funds have been received following the maturity of an insurance policy or as a lump sum pension payment we will require
- A letter from the pension company / insurer regarding the amount (to be) released to you
- A bank statement showing evidence of the funds being paid into your account
Third Party Gifts
If you are receiving a gift or gifts, perhaps from family members of friends we will need you to supply the following details for each gift that you are receiving
- Amount of the gift
- Full name of person gifting
- Their address
- Relationship to you
- Where the money is currently held, for example, in a UK Bank Account
Once we have this information, we will need to write to the individual providing the gift to obtain their confirmation that the funds that they are providing you with is a gift. We will also require them to provide us with
- Evidence of their identity, as detailed here.
- Evidence of their source of funds e.g savings or inheritance
- If you are purchasing a property with a mortgage, your lender will, in most cases, require a letter from the person gifting, waiving any rights in the property. We will supply a template letter for signature if required.
If you are receiving a loan from a family member or friend we will need you to supply the same information as detailed above under third party gifts, for each person who is loaning you any money.
We will also require them to provide us with
- Evidence of their identity, as detailed here
- Evidence of their source of funds e.g savings or inheritance
- A copy of the loan agreement that has been put in place
- If you are purchasing a property with a mortgage, we will be required to inform your lender about the additional loans that you are receiving.
Funding Your Transaction
In all cases we will need to see a current bank statement, for each account from which funds are being provided, evidencing that you, or a third party provider of your funds, has the full amount of the funds required to complete your transaction. When we ask you to transfer the funds to us you will need to send the funds from the bank account for which you provide evidence.