Can my client use bitcoin to purchase property?

I am the money laundering assessor for a conveyancing company to act in the cash purchase of a local property for £795,000. Customer due diligence revealed that the money came from the customer’s investment in bitcoin. Does the Law Society have advice on bitcoin?

Bitcoin is a type of digital currency that some individuals and businesses are now using. It operates independently of a central bank.

There are no specific guidelines from the Law Society. You should factor this source of new funding into your practice-wide and file-level risk assessments.

You might want to consider the following:

You should also consider what additional measures are appropriate to address the risks presented by the transaction. See Regulation 33(5) and Sections 6.17 and 6.18 of the Anti-Money Laundering Guidelines for the Legal Sector.

You can consider that a significant risk in this transaction is that the bitcoin could come from criminal activity.

You will need to take steps to establish that the original funds used to purchase bitcoin came from legitimate sources, and then trace those funds back to the funds that will be used for the purchase.

This could include:

  • obtain proof that the source of the funds used to invest in bitcoin are from legitimate sources – for example, if they come from a salary, obtain payslips
  • verify that the original funds were indeed invested in bitcoin – for example, by obtaining bank statements showing the transfer from the bank account to a bitcoin exchange
  • verify that the bitcoin investment has actually generated the funds to be used to purchase the property
  • obtain proof that the bitcoin proceeds are deposited into the account used to provide the purchase funds

Determine if the crypto provider is reputable and regulated by the Financial Conduct Authority (FCA).

Where the crypto-asset wallet provider is supervised for anti-money laundering to a comparable standard, this can be considered to be of reduced risk.

There may be other risks that the company should consider and mitigate based on information provided by the client on a risk-based approach.

If you consider that you do not have sufficient skills or time to undertake the necessary checks and analyses, consider whether you should refuse to act on the grounds that you cannot adequately manage the risks of money laundering and others.

Alternatively, you can hire an expert, such as an accountant, to help you perform the necessary analysis of sources of funds. You would be free to agree the expert’s fees with your client.

For more information see: