[NEWS] At the end of May, the Council for Licensed Conveyancers (CLC) quietly introduced a new Source of Funds (SOF) and Source of Wealth (SOW) checklist for its members. While it may have gone under the radar, this guidance holds significant value for the conveyancing trade, especially given the rising regulatory penalties for non-compliance with anti-money laundering (AML) checks.

In 2022, the Financial Conduct Authority (FCA) issued 14 fines, a substantial increase from the previous year’s 4 fines. Notably, Santander, a prominent retail bank, incurred a hefty penalty of £108 million due to “serious and persistent gaps in its anti-money laundering controls.” It’s essential to recognize that regulators aren’t solely targeting large corporations. Earlier this year, the Solicitors Regulation Authority (SRA) fined Ferguson Bricknell, a firm in Oxfordshire, £20,000 for its failure to implement anti-money laundering training and systems.

With smaller firms facing greater scrutiny, it becomes crucial for firms and their employees to stay updated with the latest guidelines to mitigate potential penalties and combat money laundering effectively.

Let’s delve into the key takeaways from the CLC’s recent guidance:

Clear Communication

The CLC encourages firms to explain the requirements for SOF and SOW explicitly in their terms of engagement or letters to clients. By eliminating ambiguity, firms can minimise client friction during the source of funds process. When guidance is clearly outlined from the outset, clients are more likely to comply, avoiding surprises or resistance later on.

Early Checks

Conducting SOF and SOW checks as early as possible not only alleviates pressure from the transaction at a later stage but also enables firms to identify and address any potential issues promptly. By obtaining and analysing the relevant information early on, conveyancers are better equipped to detect suspicious activities. Addressing concerns at an earlier stage makes it easier to find suitable solutions.

Comprehensive Assessment

The guidelines emphasise the need to go beyond simply verifying proof of funds. Merely confirming that the money originates from a UK bank account is no longer sufficient. Solicitors must now delve deeper and determine how and where clients obtained the funds for the specific transaction or business relationship.

At Verify 365, as a risk and compliance tech company regularly working with conveyancers, we commend the CLC for taking proactive measures to support the industry in combatting money laundering. Recent developments underscore the increasing seriousness with which regulators are addressing this issue. To avoid potential penalties and safeguard their credibility, the sector must act swiftly and ensure compliance with these evolving guidelines.

Our technology and expertise are at your disposal to assist conveyancing firms in navigating this complex landscape and ensuring the highest standards of risk management and compliance.