It’s not impossible but only a few law firms in the UK can accept instructions where cryptocurrency is involved.
The The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (often referred to as simply The Money Laundering Regulations), as amended, directs all law firms engaged in work that comes within the scope of these Regulations, to carry out client and matter risk assessments, to include anti-money-laundering checks on the source of funds to be used in the matter.
The services which come within the scope of the Regulations include Residential and Commercial Conveyancing, Probate and Estate Administration, Trusts and any matter where a client’s money is held and/or managed on their behalf (this does not include the payment for legal services).
If you are wanting to purchase property in the UK and you wish to use cryptocurrency or cash generated by cryptocurrency, we may not be able to act for you (we do not accept cryptocurrencies as payment for our services in any event).
The reason for this is that cash is a bit like water from a tap, it is impossible to separate one source of cash from another. You can put some water into a separate jug but the source of the water is not the tap, it is not even the water works owned by the water company, it goes right back to the original reservoir and the lakes and rivers that feed into it. Cash is intrinsically linked to all other cash flows e.g. money held/used/disposed of/acquired by the buyer. Legislation obligates us to do all we can to ensure that we are not in any way facilitating money laundering, terrorist financing, sanctions breaches, etc.
Where cryptocurrency is involved, understanding the true source of the currency or the origins of the cash equivalent, is extremely difficult without the use of specialist “blockchain analysis” technology. Despite efforts by legislators across the world, cryptocurrencies remain a significant risk, as they are still so appealing to criminals due to their pseudonymous nature and the ease with which it allows the transfer of funds to anyone, anywhere in the world.
The blockchain analysis technology is expensive and only a handful of law firms currently have taken the step to access to it, as it is relatively new. As the use of cryptocurrency expands and becomes more mainstream in the UK, the technology will become more readily available, and we hope to be able to accept your instructions in the future. Unfortunately, for now, we simply do not have access to the necessary technology to allow us to satisfactorily complete due diligence and meet our regulatory obligations where cryptocurrency is involved.
If you are looking to purchase property with cryptocurrency-generated funds then be sure to advise the estate agents advertising the property and the conveyancing firm you wish to instruct in good time and check they are able to accept your instructions.
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