Anti-Money Laundering (AML) for mortgages refers to the rules and checks that lenders, brokers, and financial institutions must follow to prevent criminals from using mortgage loans to launder illegal money. These requirements are part of broader financial crime regulations.
Mortgage transactions involve large amounts of money and property, which makes them attractive for criminals who want to:
For example, someone might use illegally obtained money as a deposit or repay a mortgage quickly to clean the funds.
Lenders must verify the borrower’s identity and understand who they are dealing with.
Typical checks include:
Lenders must understand where the money for the deposit comes from.
Common acceptable sources:
Evidence may include:
If the transaction is large or unusual, lenders may ask how the borrower accumulated their overall wealth.
Example explanations:
Borrowers are screened to see if they are a Politically Exposed Person, meaning someone who holds a prominent public position.
PEPs require enhanced due diligence because they may have higher corruption risk.
Applicants are checked against international sanctions lists to ensure they are not restricted individuals.
Lenders may continue monitoring if something unusual happens, such as:
If a lender suspects money laundering, they must report it to authorities.
In the UK this is done through the National Crime Agency via a Suspicious Activity Report (SAR).
Mortgage AML checks in the UK come from regulations such as:
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