Understanding Source of Funds and Source of Wealth Checks When Buying a Property

When you buy a property, your solicitor or conveyancer is legally required to carry out detailed Anti-Money Laundering checks. These checks are designed to protect the property market from fraud, money laundering and the financing of crime.

Two of the most important parts of this process are:

1. Source of Funds checks

2. Source of Wealth checks

Although they sound similar, they are different and both will almost always be required. Clients sometimes assume that showing their bank statement is enough, but the rules go much further. Below, we explain the difference and how you can prepare.

What is a Source of Funds Check?

A Source of Funds check looks at the actual money being used to buy your property. The solicitor must be satisfied that the money for your deposit and balance has come from a clear and legitimate source.

This is not just about showing you have the money in your account today,

it is about proving the journey the money has taken into your account.

Examples of evidence for Source of Funds include:

• Bank statements showing savings being built up from salary over time.

• A completion statement showing money received from the sale of another property.

• A copy of a will and a solicitor’s letter showing inheritance funds.

• A signed gift letter from a parent or relative, along with their bank statements showing where their money came from.

• Statements showing the sale of shares, bonds, or other investments.

• A formal mortgage offer from your lender.

The solicitor must be able to trace the money clearly from its origin through to the account it will be sent from for your purchase.

What is a Source of Wealth Check?

A Source of Wealth check takes a wider view. It looks not just at the money being used for this transaction, but at your overall financial position. The solicitor must understand how you have built your wealth over time and be satisfied that it has come from legal and legitimate means.

Source of Wealth checks are now almost always required, regardless of the size or complexity of the purchase.

Examples of evidence for Source of Wealth include:

• Payslips, P60s, or employment contracts showing your career earnings.

• Company accounts, dividend vouchers, or other proof of business profits if you are self-employed or a company director.

• Investment records or pension statements showing long-term wealth building.

• Evidence of previous property ownership or property portfolios.

• Confirmation of inheritance or family wealth passed down.

• Documentation of any significant asset sales, such as a business or land.

The aim is to show a complete picture of how you are in a financial position to buy property at this value.

Key Differences Between Source of Funds and Source of Wealth

Source of Funds	Source of Wealth
Focuses on the exact money being used for the property purchase.	Looks at your overall financial position and how you have built up your wealth over time.
Always required.	Now almost always required, even for straightforward transactions.
Proves the journey of the money into your account.	Explains how you came to be able to afford the property in the first place.
Evidence is often short-term (recent bank statements, sale documents, gift letters).	Evidence is often long-term (employment history, investments, inheritance, business profits).

Why Both Checks Are Needed

It is common for clients to feel frustrated when asked for both types of evidence. You may think, “I have already shown my bank statement, why do I need to provide payslips or business accounts as well?”

The reason is simple:

• Source of Funds proves where the money for this purchase is coming from.

• Source of Wealth proves how you are in the financial position to afford the property in the first place.

For example: If you are buying a £750,000 property with £200,000 in savings, your solicitor needs to see the bank statements showing that £200,000 (Source of Funds). But they will also want to see payslips, tax returns or investment records showing how you were able to accumulate that level of savings (Source of Wealth).

Practical Advice for Clients

1. Expect both checks – nearly every buyer will need to provide evidence of both the money for this transaction and their wider financial history.

2. Gather documents early – as soon as your offer is accepted, start putting together bank statements, payslips, tax returns, investment records, or inheritance paperwork.

3. Keep everything clear – highlight or explain unusual payments or large deposits to help your solicitor follow the trail.

4. Avoid last-minute transfers – sudden movements of money between accounts without explanation can delay checks.

5. Be honest and open – if your financial circumstances are unusual or complex, tell your solicitor early so they can advise what evidence will be required.

6. Respond quickly – delays in providing documents are one of the most common causes of hold-ups in conveyancing.

Final Thoughts

Source of Funds and Source of Wealth checks are not optional. They are legal obligations that solicitors must follow for every client, regardless of background. By preparing for both checks at the very start of your property purchase, you can avoid unnecessary stress, reduce delays, and ensure your transaction progresses as smoothly as possible.

Think of it this way:

• Source of Funds asks: “Where is the money for this property coming from?”

• Source of Wealth asks: “How did you come to have that money in the first place?”

Both need to be answered clearly, with the right documents, for your solicitor to proceed.