Why Scottish Solicitors Need to Verify Your Identity and Check the Source of Funds
If you've been asked to provide identification when instructing a solicitor, you wouldn't be alone in finding it a little surprising. It can feel unnecessary, especially if you've worked with the same firm before or if the matter seems fairly straightforward. In practice, though, Scottish solicitors are legally required to verify who they are acting for and, in many transactions, to understand where the funds involved are coming from. These obligations are not discretionary. They are a condition of operating as a regulated legal practice.
The requirements stem from the UK's Anti-Money Laundering (AML) framework, which applies to all Scottish law firms regulated by the Law Society of Scotland. Whether you are buying or selling a property, dealing with an executry, setting up a business arrangement or taking out a power of attorney, your solicitor is required to carry out certain checks before work can begin in earnest.
The Legal Framework Behind Identity Checks
Scottish solicitors are subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which were updated by subsequent legislation and Law Society guidance. These regulations require solicitors to carry out what is known as customer due diligence (CDD) before or during the commencement of relevant legal work.
In practical terms, this means your solicitor must:
Confirm who you are.
Verify your identity using reliable, independent documentation.
Understand the nature and purpose of the legal work you are instructing.
In appropriate cases, understand the source and destination of any funds involved.
Keep your information under review throughout the matter and update it where necessary.
These checks apply most commonly to residential property transactions, executries and estate administration, commercial property and business matters, and any situation involving the movement of significant funds. They are not about doubting clients. They are about ensuring that the legal profession cannot be used, even unknowingly, to facilitate financial crime.
What Counts as Acceptable Photo Identification?
To verify your identity, your solicitor needs to see a current, government-issued document that shows your photograph, full name and date of birth. The two most commonly accepted forms are:
A current passport
A UK photocard driving licence
The document must be in date and legible. An expired passport or a driving licence with damage to the photograph will not satisfy the requirements. If you do not have either of these documents, it is worth raising this with your solicitor early on, as alternative arrangements may be possible but will require additional consideration and should not be left until the last moment.
How Will Your Address Be Verified?
Alongside photo ID, your solicitor must also verify your current residential address. This is done using a separate document that links your name to where you live. Commonly accepted documents include:
A recent utility bill (gas, electricity or water)
A council tax bill
A bank or building society statement
A letter from a government body such as HMRC or DWP
These documents generally need to be recent, typically dated within the last three months, though a council tax bill for the current year is usually acceptable. Mobile phone bills are generally not suitable, and handwritten or informal documents will not be accepted.
It is important that the name on your address document matches the name on your photo ID. If there is a discrepancy, your solicitor may need to ask for further clarification or additional documentation before they can proceed.
What Is a Source of Funds Check, and When Does It Apply?
In addition to verifying who you are, solicitors are increasingly required to understand where the money involved in a transaction has come from. This is separate from confirming your identity and applies wherever significant funds are being used or transferred in the course of legal work.
Source of funds checks are particularly relevant in property transactions, where your solicitor may ask you to explain and evidence the origin of funds you are using for a purchase. Common examples include:
Savings built up over time (a bank statement history may be required)
Proceeds from the sale of another property
An inheritance or gift from a family member
A redundancy payment, pension lump sum or insurance payout
Funds from the sale of investments or shares
Your solicitor may ask you to provide bank statements, a letter from the source of a gift, or other supporting documentation depending on the circumstances. If funds are coming from multiple sources, each will need to be explained and evidenced appropriately.
Source of funds checks are not an accusation. They are a regulatory requirement designed to ensure that property and other legal transactions are not used to launder the proceeds of crime.
It is worth being prepared for these questions, particularly if you are buying a property and part of the funding is coming from a gift, an inheritance, or accumulated savings. Having the paperwork ready in advance can help avoid unnecessary delays. Our Buying and Selling Guide has more information about what to expect at the different stages of a transaction.
Do You Need to Come Into the Office?
Many people assume that AML checks require a face-to-face meeting, but that is not always the case. A number of firms, including our own, are able to carry out identity verification remotely using secure electronic systems or video calls where this is appropriate and proportionate.
What matters is not the method of verification, but that the solicitor can demonstrate the check was thorough and appropriate given the nature of the matter. Where there are higher risk factors involved, a face-to-face meeting may still be the preferred or required approach. Your solicitor will let you know what is needed in your particular situation.
How Long Does Verified ID Remain Valid?
The regulations do not set a fixed expiry period for verified identity documents. Instead, solicitors are required to keep client information under review and refresh it when circumstances change. In practice, your solicitor may need to ask for updated documentation if:
A significant amount of time has passed since your last matter with the firm.
Your personal details have changed, for example a change of name or address.
The nature of the work changes substantially from what was originally anticipated.
Any factor arises which gives reason to revisit the original checks.
Solicitors are also required to retain AML records for at least five years after a matter concludes. After that period, personal data must generally be deleted unless there is a lawful reason to keep it, in line with data protection legislation.
Why These Checks Are in Your Interest
It is easy to view AML checks as an administrative inconvenience, but they serve a genuine purpose for clients as well as the wider system. Properly conducted checks help to ensure transactions are legitimate, protect clients from being drawn into fraudulent arrangements they may not even be aware of, and demonstrate that their solicitor is operating to a professional standard.
There is also a practical benefit. Lenders, financial institutions and other solicitors involved in a transaction often carry out their own checks. If your solicitor has completed thorough verification at the outset, it reduces the likelihood of delays arising later when the matter is at a more time-sensitive stage.
Working with Stewart and Bennett
At Stewart and Bennett, identity and source of funds checks are carried out carefully and with as little disruption to the client as possible. We will always let you know clearly what documentation is needed and why, and we are happy to discuss any questions or concerns you have about the process.
Whether you are embarking on a residential property transaction, dealing with a will or executry, or have a general legal matter you would like to discuss, we are here to help. If you are unsure what documents you will need, or if your circumstances are slightly out of the ordinary, please do not hesitate to get in touch and we will be glad to talk it through with you before your matter gets underway.