When working with a sourcing agent there are a number of key questions that you should expect to be asked, even before any deal is presented or the sourcing process commences. When an agent works in this way, they not only protect themselves and the seller but also you as the buyer, which has to be a bonus!
The reason for these questions, is that a sourcing agent would be in breach of Money Laundering Regulations if they do not complete ID Verification and Client Due Diligence ‘Prior’ to forming a business relationship with a new client; this doesn’t have to be the signing of a contract, it could be simply a verbal agreement to work together.
We have created this guide for investors to make you aware of what questions may be asked by any sourcing agent, there are no surprises, you are aware as to why these questions are asked and trust between you is built up quickly.
Questions to Expect
Some of these questions are very personal, you may even feel intrusive, however you have to provide answers to these questions when working with your solicitor or finance provider; sourcing agents are an intrinsic part of this process and are governed by exactly the same rules.
- Proof of who you are (ID Verification)
- Proof of where you live (ID Verification)
- Proof of company existence + Directors/Shareholders (If investing through company)
- Proof of funds to be used in any purchase
- Proof of source of those funds to be used
And alongside these questions be asked to provide physical proof for each, such as driving licence, passport, bank statement, proof of where your cash came from.
They Are a Legal Requirement
We often get asked, if a solicitor also asks these questions why do I have to provide the information twice?
HMRC have provided clear guidance stating that agents who deal with property and land sales must carry out their own due diligence checks, otherwise they may be held liable should illegal activity be found.
You can review HMRC’s guidance below. They class sourcing agents as Property Finding Agents (Property Finders): https://www.gov.uk/guidance/registration-guide-for-estate-agency-businesses
What If I’m Not Asked?
If you are not asked any of these questions prior to being presented a deal, or even after when you state that you want to buy it, we would advise you politely walk away from them as chances are, the sourcing agent is not operating legally and compliantly, which puts you at risk.
All NAPSA Members go through thorough in depth compliance checks to make sure that their processes are complete and meet the current national minimum standards.
I don’t feel comfortable with these questions
Unfortunately questions are there to help sourcing agents meet what is required of them under current Money Laundering Regulations and if as an investor you state that you are not prepared to provide them, HMRC advise at the very least that the agent walks away, or if they feel is suspicious advise to submit a Suspicious Activity Report (SAR) to the National Crime Agency for further investigation.
This level of information is of course very personal, which is why professional sourcing agents want to build a relationship with an investor and would not expect you to hand over that level of information after an initial call, but only when you are happy with the relationship and feel safe to do so.
Remember, the agent should not work for you until ID Verification and due diligence has been completed and they are happy with the result and so if you chose to take time to consider, so must the agent.
Want to Stay Updated?
We will continue to develop this guide as legislation or the process changes. If you’d like to stay updated on this and any other relevent investor information, including matching sourcers to you – please register by completing the form below – or by visiting our Investor page.
