How the money laundering rules affect you

You may not have given much thought to money laundering and conveyancing – after all, you just want to buy or sell your home! But did you know: * Money laundering is the third biggest industry in the world * £90 billion in cash is laundered in the UK each year * Residential property transactions made up 32% of all suspected money laundering activity in the last 3 years (as reported to the National Crime Agency) * Solicitors can go to prison and incur heavy fines if they don’t report suspicious activity The anti-money laundering rules for law firms are very rigorous. And, as you can see above, the penalties for not following the rules are very severe. So money laundering has a real impact on how we handle your conveyancing transaction. What is money laundering?

Money laundering means putting money from illegal activities into the legitimate economy so its murky origins can’t be detected. Moving funds between different bank accounts, people and even countries helps the criminals to ‘clean’ their funds. Conveyancing firms are a prime target for money launderers.

With hundreds of thousands of pounds changing hands in one transaction, they see it as an easy way to launder a lot of cash in one go. Why ID checks are so strict One of the most important aspects of the anti-money laundering rules is client identification. It’s the first thing we do when you instruct us to act for you; without satisfactory ID, we can’t proceed. When we ask for your ID at the start of the process, we have to check the following: * That you are who you say you are * If you are selling a property, that you are the owner of the property * If you are buying a property, that the funds you are using are from a legitimate source We analyse all clients through an electronic ID verification system. This screens personal details against a wide range of databases and is a quick and thorough method of verification.

We also check that the bank account details we have for you, match your address. If you are selling a property, we check the Land Registry for details of who is registered as the owner. If you are buying, we ask for 6 months of bank statements and will query if the source of funds for the deposit isn’t clear. When someone else has given you your deposit funds (e.g. a parent or other family member) this does mean asking for more information. We understand that this might seem intrusive, but we have to track where the money came from originally. In addition to these initial checks, we also have to monitor transactions as they progress and report any suspicious activity. How money laundering rules affect conveyancers Solicitors who don’t follow the rules are at risk of very heavy penalties. In January 2019 solicitor Ross McKay was sentenced to 7 years in prison for money laundering activities. He had not made the required checks in more than 80 property transactions for clients who were subsequently jailed for money laundering and fraud. In 2017 international law firm Clyde & Co. was fined £50,000 and three of its partners were fined £10,000 each for breaching money laundering rules.
They had allowed a client account to be used as a banking facility when there was no actual legal transaction in place. So you’ll understand why we’re so scrupulous about those checks! Yes, the rules can be cumbersome and can mean your property transaction doesn’t move as quickly as you may want it to in the early stages. But without this system of checks, you could be inadvertently helping a criminal to prosper.

Right to Buy - Meaning and Eligibility

Have you ever thought about purchasing your council/housing association property? Perhaps as a way to climb the property ladder or secure your home for your future and that of your family? If eligible, the scheme would allow you to purchase the property at below market value. The discount can be more that £100,000 in some cases. Many people appear to have profited from the scheme; especially as none of the discount will need to be repaid if you sell after 5 years and house prices continue to rise.

The RTB scheme is currently available for properties in England, but we don’t know for how long. The RTB scheme ended in Scotland on 1 August 2016 and in Wales on 26 January 2019.

What does it all mean?

The Right to Buy (“RTB”) scheme is an arrangement to allow eligible Local Authority Tenants and some Non-Charitable Housing Association Tenants the right to purchase the property they live in. It is a right as set out in the Housing Act 1980. The type of property is often houses and flats (the scheme allows for freehold and leasehold properties).

You can buy your home if:-

• It is your only property;
• You rent the whole of the property (i.e. not just a room within it);
• You are an “eligible tenant” (see “RTB Eligibility” below); and
• You have an eligible tenant for at least 3 years.

The RTB scheme offers a discount to eligible individuals. The maximum discount for inside London is £108,000 and the maximum discount for the rest of England is £80,900. There is a calculator on the gov.uk website to help you work out your discount. The discount is dependant on how long you have been an eligible tenant, in the property. We encourage you to speak with your Landlord or one of the Government Advisors (see “RTB Eligibility” below) who should be able to give you specific information.

RTB Eligibility

The RTB scheme is predominantly for Local Authority Tenants rather than Non-Charitable Housing Association Tenants, although the scheme does offer a “preserved right” for previous Council Tenants who are now Housing Association Tenants.

There is a very useful quiz  on the gov.uk website which will help you to assess your eligibility. Alternatively if you would prefer to speak to someone, the Government have set up an advisory service. The agent should be able to run through the eligibility quiz with you and answer the questions you may have. The agent should also be able to help you with the application process.

Please note, you will not be eligible for the RTB scheme if you have been ordered to leave your home by way of a court order. In addition you cannot buy your home if you are an undischarged bankrupt, have a bankruptcy petition pending against you, or have made an arrangement with creditors (people you owe money to) and you still owe them money.

Finally, it is worth mentioning that, you can jointly apply for the RTB scheme with members of your family (as long as they have lived with you for the last 12 months) or someone that you are already a joint tenant with.

RTB Process

The first step is to have a chat with your Landlord or one of the Government Advisors, to establish your eligibility. If eligible there is an initial claim form for you to complete. This is known as the RTB1 Form. The Government Advisory Service will be able to help you with this form. You will also need to find a Solicitor to help you with the legal side of the process – this is where we can help you – and a Mortgage Advisor to help you with your mortgage (if applicable). We can recommend Mortgage Advisors for you.

How does Right to Acquire compare?

The Right to Acquire (“RTA”) scheme is an arrangement to allow tenants not eligible for the RTB scheme the right to purchase their homes, in accordance with the Housing and Planning Act 2016.

The RTA scheme should cover the majority of other Non-Charitable Housing Association Tenants. We encourage you to speak with your Landlord to assess you eligibility and options.

The process of the RTA scheme is not too different from the RTB scheme. It just covers a different pool of eligible people and the discount is different. There is a very useful link of the GOV.UK website should you wish to know more about this particular scheme.

Here at Brethertons LLP we are experienced in the RTB and RTA processes and we would be more than happy to help you. Please do get in touch with your enquiry. We can discuss any questions you may have and provide our quotation for you.