Compliance · 10 min read · Updated 24 October 2026

Source of Wealth Checks for Conveyancers: What the SRA Expects

Where source of wealth checks are mandatory, where they are a risk call, and what the SRA found across 5,873 files.

By Appan Pathmanathan, Chief Operating Officer, Lex Sentinel

Source of funds is where the money for this transaction came from. Source of wealth is how the client came to have it. The Money Laundering Regulations name source of wealth expressly for politically exposed persons and FATF call-for-action countries; everywhere else it is a risk judgement. The SRA's November 2025 review found no source of funds check on 648 files, and inadequate scrutiny on 18% of the files it reviewed.

Lex Sentinel, where I work, sells AML and source of wealth software, so I have a stake in this subject, though nothing below depends on a product. It is general information for SRA-regulated firms in England and Wales, not legal advice. Check the current legislation and your supervisor's guidance before you rely on it. It doesn't cover CLC firms, sanctions screening or the planned move of AML supervision to the FCA.

What is the difference between source of funds and source of wealth?

Source of funds is the origin of the money in the transaction: the deposit, the mortgage advance, a gift, the proceeds of a sale. You trace it to the account it came from and the event that put it there. Source of wealth is how the client accumulated their assets over time, whether that is salary, an inheritance, a business sale or investment gains. The Legal Sector Affinity Group (LSAG) guidance treats them in separate sections, 6.17.2 and 6.17.3 of the 2025 edition.

Take a buyer whose £500,000 deposit has sat in a UK bank account for a year, with a declared income of £40,000. The source of funds looks tidy. The account history says nothing about where the £500,000 came from.

When do the Regulations require source of wealth checks?

Expressly in two situations. The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which I'll call the Regulations, name source of wealth for politically exposed persons (PEPs) and for matters involving a FATF call-for-action country. Everywhere else you decide on risk.

Situation	What the Regulations require	Where
Client is a PEP, or a family member or known close associate of one	Senior management approval, adequate measures to establish source of wealth and source of funds, and enhanced ongoing monitoring	Regulation 35(5)
Business relationship or transaction involving a person established in a FATF call-for-action country	Additional information on the client, source of funds and source of wealth information, senior management approval, and enhanced monitoring	Regulation 33(3A)
A high-risk case under your regulation 18 risk assessment, or any other case that by its nature presents a higher risk	Enhanced due diligence and enhanced ongoing monitoring	Regulation 33(1)(a) and (g)
A transaction that is unusually complex or unusually large, shows an unusual pattern, or has no apparent economic or legal purpose	Enhanced due diligence, with the background and purpose of the transaction examined as far as reasonably possible, and increased monitoring	Regulation 33(1)(f) and (4)
Every other matter	Customer due diligence in proportion to the risk, ongoing scrutiny of transactions including, where necessary, the source of funds, and the ability to show your supervisor that your measures were appropriate	Regulation 28(11), (12) and (16)

On that last row, the SRA expects you to consider source of wealth where source of funds raises concerns. It also says the Regulations contain no provision for waiving a source of funds check, and that a long-standing relationship or funds from a UK bank don't change that.

In my view, "consider it where source of funds raises concerns" is too vague to hand a fee earner on a busy Friday, because it doesn't say which concerns. I'd write the triggers into the firm's own policy: funds that don't fit the stated income, wealth that rests on a business or overseas assets, a payer who isn't the client, and anything that sends the matter to enhanced due diligence. Those triggers are mine, not the SRA's.

The version you read matters. The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 replaced the older "high-risk third country" wording in regulation 33 with "FATF call for action country" from 30 June 2026, so guides written before then use the old term. legislation.gov.uk also lists amendments from the same instrument that it hasn't yet applied to the text, including a new regulation 34A on cryptoasset firms and correspondent relationships.

What did the SRA find in its November 2025 review?

It found no source of funds check on 648 files, inadequate scrutiny of source of funds or wealth on 18% of the files it reviewed, and on 8% a source of funds recorded in the ledger that the evidence didn't support. The SRA reviewed 5,873 files across 833 firms in 2024/25, and 5,026 of them needed source of funds or source of wealth checks. It gave feedback to 41% of the firms and referred 50 (6%) to its AML Investigations Team.

Quote the 648 as a count. The SRA's report describes it as 11% "of the 5,026 files", but 648 is 11% of the 5,873 files reviewed and about 13% of the 5,026 that needed checks. Residential conveyancing is among the highest-risk areas in the SRA's sectoral risk assessment, last updated on 4 September 2026.

What are the most common source of wealth mistakes in conveyancing?

Is a client's declaration enough evidence?

No. A declaration is where the enquiry starts. "I saved it from my salary" has to be tested against the client's income and circumstances, and the SRA found inadequate scrutiny on 18% of the files it reviewed. That matches what I've seen myself: the evidence is on the file, but nobody has tested it against the client's circumstances.

Does a UK bank transfer show the money is legitimate?

No. The SRA's risk assessment says funds sent through a UK bank account don't, on their own, show that the money is legitimate. The bank ran its checks for its own purposes.

What about gifted deposits and third-party funds?

Look at the person who is paying as well as the client. Where someone else is putting money in, you may need to understand that person's source of funds too, so work from the source of funds section of the current LSAG guidance (6.17.2) and not an older checklist.

Does the file say why you did, or didn't, check?

It should. The SRA expects a documented audit trail on every matter, including the reason a check was judged unnecessary, and regulation 40(2) requires records that are enough to reconstruct the transaction. Regulation 40 sets a default retention period of five years, with its own start dates and a ten-year limit on transaction records, and personal data is deleted afterwards unless an exception applies. Whether a purchase is an occasional transaction or part of a business relationship depends on how regulations 3 and 4 apply to the facts, so record your reasoning.

Can you rely on a video call to confirm who you're dealing with?

Not on its own. The SRA's risk assessment flags AI-enabled deepfakes and impersonation as a growing risk, particularly with remote onboarding. It also quotes government guidance saying that digital identity services not on the Digital Verification Service register "cannot reliably be deemed suitable for identity verification".

How should a firm run a source of wealth check?

One reasonable approach is five steps. The Regulations don't require any of them in these words.

Risk-assess the client and the matter first, using your firm-wide risk assessment and the SRA's sectoral assessment, and decide how deep to go before you ask for anything.
Put the same written questions to every client in a risk band. Some firms do this because it makes answers comparable, but it isn't a requirement.
Match evidence to each source the client names: payslips and tax returns for earnings, probate for an inheritance, a completion statement for a property sale.
Test plausibility against the client's age, income and history, and write down why you are satisfied or why you aren't.
Have a person make the decision, sign it off and record the rationale, and escalate to your money laundering reporting officer (MLRO, the nominated officer under regulation 21) whenever you know or suspect something, not only when a check stalls.

What if the client can't evidence their wealth?

Whether regulation 31 applies depends on which measure you couldn't complete. Under regulation 31(1), if you can't apply a customer due diligence measure the Regulations require, you can't carry out transactions through a bank account for that client, can't set up a relationship or transact outside a bank account, must end any existing relationship, and must consider whether to make a disclosure under the Proceeds of Crime Act 2002 or the Terrorism Act 2000. Source of wealth isn't a required measure outside the PEP and call-for-action cases, so an unevidenced explanation is first a risk question. If it leaves you with knowledge or suspicion, it becomes a reporting question. Regulation 31 has exceptions of its own, including for lawyers establishing a client's legal position.

If you know or suspect money laundering, or have reasonable grounds to, section 330 of the 2002 Act requires you to report to your MLRO or, in turn, the National Crime Agency (NCA). Completing a purchase while you hold that knowledge or suspicion can be a prohibited act under sections 327 to 329. That is why firms ask the NCA for a defence against money laundering, which the Act calls appropriate consent (section 335), before they exchange or complete. Regulation 31(2) is narrower and covers returning money deposited in an account.

Section 333A makes it an offence, in the regulated sector, to disclose that a report has been made or that an investigation is contemplated or being carried out, if that is likely to prejudice it. Most firms agree with their MLRO what the client is told.

Can software do the source of wealth check?

It can pull figures out of documents and flag where they disagree with the ledger. The decision stays with a person. Regulation 28(16) means you must be able to show your supervisor that your measures were appropriate, and a tool's output doesn't show that on its own. The SRA's risk assessment expects firms to assess the risks of new technology and build them into their risk framework, and it lists over-reliance on automated screening as a common sanctions vulnerability. Principle 31 of the LSAG guidance says a practice using an electronic verification tool should document the tool's role, the data sources it uses and the circumstances in which it is appropriate. If a tool says "low risk" and you accept it, the file has to show why you were comfortable.

About the author

Appan Pathmanathan is a solicitor and Chief Operating Officer of Lex Sentinel, which builds AI tools for UK conveyancers. He has worked in UK legal practice since 2001, including litigation involving money laundering and fraud, and conveyancing, and has been managing partner of a law firm. He delivers AML and compliance training. Connect on LinkedIn.

Sources

Checked on 24 October 2026.

Frequently Asked Questions

What documents prove source of wealth for a conveyancing client?

It depends on how the wealth was built, so match the document to each source the client names. Typical examples are payslips and tax returns for earnings, probate or a grant for an inheritance, and a completion statement for a property sale. Read each against the client's income and circumstances.

Do I need a source of wealth check on every property purchase?

No, not by rule. The Regulations require it expressly for politically exposed persons and for matters involving a FATF call-for-action country. The SRA expects you to consider it where source of funds raises concerns, and says the Regulations contain no provision for waiving a source of funds check.

Does a UK bank transfer prove that the money is legitimate?

No. The SRA says funds from a UK bank account don't, on their own, show that the money is legitimate. You still have to understand where the money came from.

How long do I keep source of wealth records?

The default under regulation 40 of the Money Laundering Regulations 2017 is five years, with its own start dates and a ten-year limit on transaction records. Personal data is then deleted unless an exception applies. Check the regulation for the detail.

What should I do if a client can't evidence their wealth?

Take it to your MLRO. Regulation 31 applies only where you couldn't complete a measure the Regulations require, such as enhanced checks on a PEP. Where you know or suspect money laundering you must report under section 330 of the Proceeds of Crime Act 2002, and you should seek appropriate consent before a prohibited act such as completion goes ahead.