A core early step in meeting AML obligations is verifying who your client is or who their representative is acting for. This may involve sighting identity documents, confirming beneficial owners, and recording how identity was established.
What this looks like in practice:
- Collecting ID documentation at matter opening rather than later in the process.
- Checking beneficial ownership when a client is a company, trust, partnership or incorporated association.
- Asking clarifying questions if a representative acts on behalf of another person or entity.
More scrutiny may be required for:
- Clients reluctant to provide ID
- Third parties paying fees or directing the matter
Inconsistent or missing client information
Source of funds/source of wealth
Funds that appear to come from unusual sources, or high-risk funds, may need further review.
What this looks like in practice:
- Requesting evidence that supports deposit or settlement funds, for example, bank statements showing account ownership.
- Asking about the origin of funds used by buyers or sellers, particularly in higher-risk matters.
More scrutiny may be required for:
- Funds originating from unrelated third parties
- Multiple payments from different third-party accounts
Overseas transfers with no clear link to the client
Trust account handling and transfers
AML obligations reinforce transparency and record-keeping and intersect with existing trust account rules. Trust movements may require additional questioning or documentation.
What this looks like in practice:
- Validating payment instructions before releasing trust funds
- Documenting where and from whom the funds came from and why
- Checking that names on trust receipts align with the matter parties
More scrutiny may be required for:
- Last-minute changes to payment recipients
- Trust deposits from non-clients or unknown entities
- Requests to move funds rapidly without a commercial reason
Transaction monitoring and red flags
Legal practices and conveyances should remain alert to unusual activity throughout the process, not just at the client onboarding point.
What this looks like in practice:
- Reviewing changes in transaction structure as the matter progresses
- Keeping notes of questions asked and answers received
- Escalating concerns when client explanations don’t make sense
More scrutiny may be required for:
- Purchases well above or below market value
- Complex ownership structures with no clear commercial purpose
Clients showing unexplained urgency to settle quickly
Multi-party matters (buyers, sellers, intermediaries)
Since a property transaction often involves multiple parties, AML obligations ensure each party’s role and responsibilities are clearly defined.
What this looks like in practice:
- Identifying every party in the matter, not just your immediate client
- Confirming who ultimately owns or controls an entity involved in a transaction
- Ensuring documentation aligns with the parties listed in the contract
More scrutiny may be required for:
- Third-party introductions with no clear involvement
- Buyer reliance on unrelated guarantors or funders
- Client instructions that bypass other advisers
