Source of funds checks are a core part of AML due diligence, yet they remain one of the areas where conveyancing firms most commonly fall short.
Here is what the obligation actually requires, what good evidencing looks like, and the red flags that should prompt further questions.
Why Source of Funds Trips Firms Up
Of all the AML checks a conveyancing firm carries out, source of funds is the one most likely to feel like it has been done when it has not. A bank statement has been received, a box has been ticked, and the matter moves on. But receiving a document is not the same as scrutinising it, and scrutiny is what the obligation requires.
The SRA’s supervisory findings consistently identify source of funds as an area of weakness. The most common failures are not firms ignoring the check entirely; they are firms accepting documents at face value, failing to follow up on inconsistencies, or not asking for evidence in the first place when the client’s profile and transaction give good reason to.
What the Obligation Actually Is
The requirement to understand source of funds sits within the broader customer due diligence obligations under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Firms must take reasonable steps to understand where the money used in a transaction originates and whether it is consistent with what they know about the client.
“Reasonable steps” is not a fixed standard. It scales with risk. For a straightforward residential purchase funded by a mortgage and a modest deposit from a current account, a bank statement showing the funds may be sufficient. For a cash purchase, a high-value transaction, an overseas client, or any situation where the source of funds is unclear or unexpected, considerably more is required.
Source of funds is distinct from source of wealth, though the two are related. Source of funds focuses on the specific money being used in the transaction. Source of wealth is broader and considers how the client accumulated their assets overall. In higher-risk matters, both may need to be established.
What Good Evidencing Looks Like
Good source of funds evidence answers a simple question: can the money be traced to a legitimate, plausible origin?
For most residential transactions, this means bank statements showing the deposit funds building up over time, or a clear single event such as a property sale, an inheritance, or a gift that explains their arrival. The statement should be recent, unredacted in the relevant sections, and consistent with what the client has told you.
Where funds come from a property sale, the completion statement from that transaction is the natural supporting document. Where funds are a gift, a signed letter confirming the amount, the relationship, and that it is not a loan is standard. This should be supported by evidence that the donor actually holds the funds.
Where funds originate overseas, the bar is higher. Exchange rate movements, international transfer records, and the regulatory environment of the originating country all become relevant. A foreign bank statement should not be accepted without considering whether additional verification is appropriate.
Red Flags in Bank Statements
Receiving a bank statement is the beginning of the process, not the end. When reviewing statements, certain patterns should prompt further questions.
Large, unexplained deposits can indicate layering, where illicit funds are introduced into an account to appear legitimate. Multiple smaller deposits from different sources may suggest structuring, where funds are broken up to avoid detection thresholds.
Inconsistencies with the client’s profile should also be treated carefully. Funds that appear disproportionate to what is known about the client’s occupation, income, or circumstances warrant further enquiry rather than acceptance.
Any indication that documents have been altered, cropped, or are incomplete should be treated as a serious concern. Original documents, or verified electronic statements from the bank, are preferable where there is any doubt.
When to Ask More Questions
A useful test is whether the explanation of funds feels plausible when set against everything else known about the client. If it does not, that instinct is worth acting on.
The obligation is not to prove that funds are clean, but to take reasonable steps to be satisfied that they are. Where something does not add up, further questions are required. If a satisfactory explanation cannot be obtained, the matter may need to be referred to the MLRO.
Proceeding without adequate source of funds evidence exposes the firm to regulatory risk and, in some cases, criminal liability.
Ultimately, source of funds checks are not about collecting documents, but about forming a clear and defensible understanding of where money has come from. The standard applied should reflect the level of risk, increasing where transactions are higher value, more complex, or less predictable. Where firms fall short is not usually in starting the process, but in stopping too early. The SRA’s expectation is clear: scrutiny matters, and if something does not make sense, it is not enough to record it and move on.
In 2023, a solicitor was convicted for the first time ever for tipping off, alerting a client that they were under investigation for money laundering. It was a landmark moment.
Here is what tipping off means in practice, where the line is, and how to stay well clear of it.
Why has tipping off become a focus for law firms?
For years, tipping off appeared in AML training as a theoretical risk. Solicitors understood it was an offence, but many assumed enforcement actions were rare or confined to other sectors.
The 2023 conviction changed that perception. A solicitor was found guilty under section 333A of the Proceeds of Crime Act 2002, marking the first time a member of the legal profession had been convicted of this specific offence. The case sent a clear signal that the legal sector is within scope for enforcement and that regulators are taking a more active interest.
Understanding what tipping off means in practice, and where the risks arise in day-to-day work, is now an essential part of AML compliance.
What is tipping off under UK AML law?
Tipping off occurs when someone who knows or suspects that a Suspicious Activity Report has been made discloses information to another person in a way that is likely to prejudice any resulting investigation.
In practical terms, if a report has been submitted or is suspected to have been submitted, the firm must not inform the client. This includes avoiding any statements or behaviour that could suggest they are under scrutiny.
The offence applies across the regulated sector, including legal professionals, and carries a maximum penalty of two years’ imprisonment and an unlimited fine.
Where is the line between communication and tipping off?
Two conditions must be met for the offence to arise. The person making the disclosure must know or suspect that a report has been made, and the disclosure must be likely to prejudice an investigation.
In practice, the definition of what may prejudice an investigation is broad. Referring to delays as being due to “compliance reasons”, providing vague or evasive explanations, or indicating that a matter has been escalated internally may create risk depending on the context.
The safest approach is to avoid any reference to the existence of a report. Where a transaction is delayed, a neutral explanation such as the need to complete standard checks or allow more time is generally acceptable, provided it does not imply that a report has been made.
What is the SAR moratorium period and why does it matter?
Where a Suspicious Activity Report is submitted requesting consent to proceed with a transaction, the firm must wait for a response from the National Crime Agency.
The initial period is seven working days. If no refusal is received within that time, consent is deemed to have been granted. If consent is refused, a further 31-day moratorium period applies during which the transaction cannot proceed.
During this time, the client cannot be told why the matter is delayed. This creates a practical challenge, as clients may expect progress and seek explanations. Firms that manage this risk effectively tend to prepare standard responses in advance rather than relying on ad hoc explanations.
What related offences should firms be aware of?
Section 342 of the Proceeds of Crime Act 2002 creates a separate offence of prejudicing an investigation. Unlike tipping off, this does not require a report to have been made. If someone knows or suspects that an investigation is underway and takes steps that could interfere with it, the offence may apply.
This reinforces the need for caution at an early stage. The risk does not begin only once a report is submitted, but from the point at which suspicion arises.
How should firms manage tipping off risk in practice?
Managing tipping off risk requires preparation rather than improvisation. All staff involved in client work should understand what tipping off is and why careful communication matters.
The Money Laundering Reporting Officer should be involved as soon as a report is being considered, so that communication with the client can be managed consistently. Firms should also develop agreed language for responding to delays or questions, ensuring that fee-earners are not required to decide how to respond in real time.
It is also important to recognise that internal reporting to the MLRO is not tipping off. It is a separate legal obligation and a critical part of the firm’s AML framework.
Tipping off is best understood as a risk that arises from how information is communicated, rather than from the act of reporting itself. Once suspicion exists, even well-intentioned explanations can create exposure if they suggest what is happening behind the scenes. The legal threshold is broad, and the consequences are significant.
Firms that manage this effectively do so by putting clear processes, training, and agreed client communication in place so that responses are measured, consistent, and do not depend on judgement in the moment.
Risk assessments are the foundation of AML compliance and, according to the SRA, the area where law firms most commonly get it wrong.
Here’s what a good one actually looks like, and why the tick-box approach keeps getting firms into trouble. All of that, in a five minute blog.
Why Risk Assessments Keep Coming Up
Every year, the SRA publishes its findings from AML supervisory visits across the legal sector. And every year, risk assessments sit at the top of the failure list.
In the most recent reporting period, the SRA carried out 935 proactive AML engagements across 833 firms. Around one in three were found to be non-compliant. The most common reasons were gaps in firm-wide and client risk assessments, weaknesses in AML controls, and limited internal monitoring. Risk assessments appear in almost every category of failure.
This isn’t a new problem, but the SRA’s tone has sharpened. Firms are increasingly expected to demonstrate that their risk assessments are active, documented, and driving real decisions, not sitting in a folder as evidence of compliance.
Two Separate Assessments, Two Separate Obligations
There’s a distinction worth being clear on, because conflating the two is itself a common failure.
The firm-wide risk assessment is required under Regulation 18 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. It must be a written document, approved by senior management, that identifies the money laundering and terrorist financing risks the practice is exposed to, based on its client base, geographic exposure, services offered, and transaction types. It should be reviewed regularly and updated when the firm’s circumstances change.
The client and matter risk assessment is required under Regulations 28(12) and (13) and must be completed for every single instruction. It needs to reflect both the specific characteristics of that matter, including the client, the transaction, the source of funds, and any risk indicators, and the broader context set by the firm-wide assessment. One informs the other.
The SRA has been clear that the firm-wide assessment is not a substitute for individual matter-level assessments. Both are required. Both must be documented.
What the SRA Keeps Finding
Across its 2024–25 supervisory activity, the most persistent risk assessment failures cluster around a few consistent themes.
Assessments are not always completed consistently or in full. Client and matter risk assessments are sometimes skipped entirely, partially completed, or completed after the matter has already progressed, which defeats the purpose.
Tick-box approaches are still common. Forms are filled in, but the answers do not reflect genuine consideration of the matter. Risk ratings are applied without reasoning, despite the SRA making clear it expects to see evidence that the assessment informed a decision, not just that it was done.
Firm-wide risks are not always carried through to client level. If a firm’s firm-wide assessment identifies elevated risk areas, that should be visible in how individual matters are assessed. Where there is no connection between the two, it is a clear red flag.
High-risk matters do not always receive appropriate oversight. Situations involving PEPs, complex ownership structures, or source of funds concerns should trigger escalation, but the SRA has found cases where this has not happened.
Assessments are often completed once and never revisited. Risk does not stop at onboarding, and where circumstances change, the assessment should change with them.
What a Good Risk Assessment Actually Looks Like
The SRA’s guidance, along with practical experience across the sector, points to a consistent set of characteristics.
Effective risk assessments are completed before the matter progresses, not retrospectively. They contain clear reasoning rather than just a risk rating, explaining what factors were considered and what that means in practice.
They are connected to the firm-wide picture, reflecting the risks identified at firm level in individual matters. They are also treated as live documents, revisited when circumstances change rather than filed away and forgotten.
Finally, they create a clear audit trail. It should be obvious when the assessment was completed, who carried it out, and what actions followed as a result.
The Difference Technology Makes
Manual risk assessments inevitably introduce inconsistency. Some fee-earners apply them rigorously, others less so. Digital AML workflows help address this by embedding risk assessment into the process itself.
They can make completion mandatory at the point of matter creation, prompt the right questions based on the specific context, automatically flag higher-risk scenarios, and create a clear, auditable record of decisions made.
This does not replace professional judgement. It supports it, ensuring that risk assessment is applied consistently and at the right time, rather than retrospectively or unevenly.
Taken together, the SRA’s message is consistent. Firms need both a firm-wide risk assessment and a matter-level assessment for every instruction, and both must be properly documented, actively used, and kept up to date. Completing them after the fact, or treating them as a formality, misses the point entirely. The real test is whether the assessment has shaped how the matter is handled, particularly where higher-risk scenarios require escalation or further scrutiny.
There are over thirty World Heritage Sites in the United Kingdom – from the Giant’s Causeway to Stonehenge, from Bath’s Georgian cityscape to the industrial valleys of South Wales.
These are places of outstanding universal value, recognised by UNESCO and protected by a framework that sits alongside – and sometimes above – the ordinary planning system. For anyone buying property within or near a World Heritage Site, understanding how that designation works in practice is an important part of making an informed decision.
What is a World Heritage Site?
A World Heritage Site is a place designated by UNESCO – the United Nations Educational, Scientific and Cultural Organization – as having outstanding universal value to humanity. Designation is based on specific criteria covering natural, cultural and mixed heritage, and reflects a judgement that the site is of such significance that its protection is a matter of international as well as national importance.
In the UK, World Heritage Sites are nominated by the government and managed through a combination of national planning policy, local planning authority oversight, and site management plans drawn up by the relevant authorities. Unlike some other designations, World Heritage Site status isn’t a single boundary on a map – it typically comprises a core site area and a buffer zone that surrounds it.
What is the buffer zone?
The buffer zone is the area immediately surrounding the designated World Heritage Site itself. It isn’t part of the core designation, but it exists to protect the setting and integrity of the site from development that, while outside the boundary, could still harm its outstanding universal value.
Buffer zones vary significantly in size and character depending on the nature of the site. Around an urban World Heritage Site like Bath or Liverpool’s historic waterfront, the buffer zone may extend through densely developed residential and commercial areas. Around a landscape site like Stonehenge or the Lake District, it may cover a wide area of open countryside.
Planning applications within a buffer zone are assessed with particular attention to their potential impact on the World Heritage Site. Historic England is a statutory consultee for applications in or near World Heritage Sites, and local planning policies will typically set out how the setting of the site is to be protected.
What does this mean for property owners?
Owning a property within a World Heritage Site or its buffer zone doesn’t prevent development – but it adds a layer of scrutiny to the planning process that buyers should be aware of. The key practical implications include:
- Planning applications – proposals for extensions, new development or changes of use within or near a World Heritage Site will be assessed for their impact on the site’s outstanding universal value and its setting. Applications that are straightforward elsewhere may attract Historic England’s attention and additional conditions
- Permitted development restrictions – many World Heritage Sites and their buffer zones overlap with conservation areas, where permitted development rights are already significantly restricted. Even where they don’t, the policy framework around World Heritage Sites can influence what is and isn’t permissible without full planning consent
- Design expectations – where development is permitted, design standards are typically high. Materials, scale, massing and visual impact are all likely to be scrutinised with reference to the character and integrity of the designated site
- Tourism and visitor pressure – properties within World Heritage Sites, particularly those in rural or historic settings, can be affected by visitor footfall, management arrangements and restrictions on commercial use linked to the site’s management plan
How is World Heritage Site proximity identified?
The boundary of each World Heritage Site and its buffer zone is defined in the relevant site management plan, and should be reflected in the local planning authority’s local development plan. A CON29O optional enquiry can surface information held by the local authority about World Heritage Site designations affecting or near a property.
For buyers considering properties in areas associated with known World Heritage Sites – a Georgian townhouse in Bath, a rural property near Hadrian’s Wall, a home in the Cornish Mining Landscape – it’s worth confirming the precise position of both the core designation and the buffer zone before exchange.
Does World Heritage designation affect value?
The evidence on value impact is mixed and location -specific. In some contexts – Bath being the obvious example – World Heritage status is associated with a premium, reflecting the desirability of living in an internationally recognised historic environment. In others, the restrictions that come with the designation may be a factor that some buyers weigh carefully.
For buyers who value architectural character, historic setting and the protections that come with a carefully managed environment, a World Heritage Site location can be genuinely appealing. For buyers with ambitious development plans, it’s worth understanding the framework clearly before committing.
World Heritage designation is a mark of exceptional significance – but it’s also a planning consideration with real, practical consequences for property owners within and around the designated area. Knowing whether a property sits inside the core site, within the buffer zone, or simply near the boundary matters – because the implications differ across each. It’s the kind of detail that a CON29O enquiry is designed to surface, and exactly the kind of thing worth knowing before exchange.
Britain’s landscape is layered with history – and some of that history is legally protected in ways that have very direct consequences for property owners.
Scheduled Ancient Monuments represent some of the most significant archaeological and historic sites in the country, and the legal framework that protects them is strict. For buyers whose property sits on, near, or over a scheduled monument, understanding what that means is essential.
Lets start peeling those historical layers in our latest ‘Five Minutes On…’ focus.
What is a Scheduled Ancient Monument?
A Scheduled Ancient Monument – often abbreviated to SAM – is a site of national archaeological or historic importance that has been formally designated by the Secretary of State under the Ancient Monuments and Archaeological Areas Act. Scheduling is intended to preserve sites of exceptional significance for future generations, and the protection it confers is among the strongest in the heritage planning system.
The UK’s scheduled monuments range from prehistoric standing stones and Bronze Age burial mounds to medieval castles, Roman forts, industrial archaeology and Cold War infrastructure. There are currently over 19,000 scheduled monuments in England alone, managed by Historic England on behalf of the government.
What restrictions does scheduling impose?
Scheduling places significant restrictions on what can be done to or near a designated monument. Any works that would have the effect of demolishing, destroying, damaging, removing, repairing, altering, adding to, flooding or tipping on a scheduled monument require Scheduled Monument Consent – a form of permission granted by the Secretary of State, not by the local planning authority.
In practice this means that activities most homeowners take for granted – digging foundations, installing drainage, planting trees, landscaping a garden – may require formal consent if a scheduled monument is present. The threshold is deliberately low, because the significance of what lies beneath can be damaged by works that appear minor on the surface.
Crucially, planning permission and Scheduled Monument Consent are entirely separate processes. A local planning authority can grant planning permission for works on or near a scheduled monument – but that permission does not authorise works affecting the monument itself. Consent from Historic England is required in addition.
Does scheduling affect properties that aren’t on the monument?
Yes – and this is where buyers can be caught out. Scheduled monument designations don’t stop at the boundary of the monument itself. The scheduling often extends across a wider area than is immediately obvious, and the setting of a monument can be a material consideration in planning decisions even where the scheduled area ends some distance away.
A property that sits adjacent to a scheduled monument, or within its extended designation area, may find that planning applications for extensions, outbuildings, or landscaping attract detailed scrutiny from Historic England. This doesn’t mean permission won’t be granted – but it means the process is more complex, and the outcome less certain, than it would be for a comparable property elsewhere.
How is a scheduled monument designation identified?
The National Heritage List for England, maintained by Historic England, is the definitive record of all scheduled monuments in England. A CON29O optional enquiry can surface information about scheduled monument designations recorded by the local authority. The monument’s entry on the National Heritage List will describe the extent of the scheduling and the nature of the site.
Where a property sits in an area with a known archaeological character – a landscape with visible earthworks, a location near a known Roman road, a site with a name suggesting historic use – it’s worth raising the relevant optional enquiries even if scheduling isn’t immediately apparent.
What should buyers do if a scheduled monument is identified?
Where a scheduled monument is identified in connection with a property, the conveyancer should consider what the practical implications are for the buyer’s intended use. If the buyer plans to carry out any works – even relatively minor ones – specialist heritage advice may be warranted before exchange. Historic England’s regional teams can advise on what consent is likely to be required and what the prospects of success are.
An indemnity policy may be available in some circumstances where historic works have been carried out near or on a scheduled monument without the necessary consent, though the underwriting criteria for such policies can be demanding.
Scheduled Ancient Monument designation is one of the strongest forms of heritage protection in the English legal system. It doesn’t make a property impossible to own, develop or enjoy – but it does impose a framework of restrictions that buyers need to understand before they commit. A property with a scheduled monument on or near its land is still a property worth buying. It’s just one where the due diligence needs to go a layer deeper.
Public footpaths are a much -loved feature of the English and Welsh countryside – but they don’t always stay where they started.
When development takes place, existing rights of way can be in the way of new buildings, roads or infrastructure. Section 257 of the Town and Country Planning Act provides the mechanism for diverting or extinguishing those paths as part of the planning process.
For buyers, understanding whether a footpath diversion has taken place – or is planned – near a property can matter more than they might expect. So, without any diversions, lets take a deep dive into the topic in five minutes:
What is a Section 257 diversion?
When a developer is granted planning permission for a scheme that affects an existing public right of way, they can apply to the local planning authority to have that path diverted or stopped up under Section 257 of the Town and Country Planning Act. Unlike other footpath diversion orders – which go through the highway authority – Section 257 orders are made by the local planning authority as part of the planning process, often running alongside the main planning consent.
The effect is to legally redirect a footpath from its recorded route on the definitive map to a new alignment that works around the development. The old route is extinguished. The new route, once the order is confirmed and the path is open, becomes the legal right of way.
Why does this matter for buyers?
A footpath diversion that hasn’t been properly completed can create a legal grey area. If a development has been built over an existing right of way but the diversion order hasn’t been confirmed and the new path hasn’t been opened, the original right of way technically remains in place – even if there’s now a building sitting on top of it.
For buyers, this can matter in several ways:
- Access rights – members of the public retain the legal right to use the original path until a diversion is properly confirmed, which can create an awkward situation where the theoretical right of access conflicts with the physical reality of a built development
- Title complications – where a diversion hasn’t been completed, title to land that was previously subject to the right of way may be encumbered until the order is finalised
- New path maintenance – once a diverted path is open, the new route is subject to the same public access rights as the original, and landowners have obligations in relation to its maintenance and condition
- Developer obligations – where a diversion order is part of a planning consent, the developer may have obligations to complete the new path before or alongside the development. Whether those obligations have been fulfilled is worth checking
How are Section 257 diversions identified?
Information about footpath diversion orders made under Section 257 can be held by the local planning authority as part of the planning history of a development site, and by the highway authority which maintains the definitive map of public rights of way. A CON29O optional enquiry covering public rights of way amendments can surface changes to the definitive map in the vicinity of a property.
Where a property is near a recent development – a new housing estate, a commercial scheme, or a road improvement – it’s worth asking whether any rights of way in the area have been subject to diversion orders as part of that development.
What’s the difference between a Section 257 order and other path diversions?
There are several legislative routes for diverting a public right of way. Section 119 of the Highways Act allows a highway authority to divert a path in the interests of the landowner or the public. Section 257 is specific to situations where the diversion is needed to facilitate development with planning permission. The practical difference for buyers is mainly about which authority holds the relevant records – though both types of diversion should ultimately appear on the definitive map once confirmed.
Footpath diversions are a routine part of how development happens alongside existing rights of way – but routine doesn’t mean automatic. A diversion order that hasn’t been completed, a new path that hasn’t been opened, or a change to the definitive map that hasn’t yet been recorded can all create complications that a careful conveyancer will want to identify and resolve. It’s one of a number of reasons why enquiries about rights of way near a property are worth raising, particularly where any recent development has taken place in the vicinity.