Conveyancers are reminded that the requirement to include ‘purpose codes’ for property transactions, as mandated by the Bank of England (BoE), will officially come into force this week. Initially scheduled for implementation in November 2024, the rollout was postponed and will now begin on 1st May 2025.

Purpose Codes are intended to categorize the reason for the movement of funds between two bank accounts. According to the BoE, providing this additional information will aid in combating money laundering and financial crime, making it harder to transfer money without clearly identifying the parties involved.

The new global messaging standard, ISO 20022, requires a richer set of data to accompany payments. The BoE states that this will enhance payment efficiency, facilitate payment prioritisation, and help prevent financial crime.

Firms should already be applying Purpose Codes for certain transactions and must select the appropriate code for CHAPS payments when they relate to the following:

Starting 1st May, the Bank of England will also promote the use of codes connected indirectly to property transactions, such as:

The upcoming changes are expected to have minimal effect on firms who initiate CHAPS payments manually through online banking, as users will simply need to select a Purpose Code from a dropdown menu. However, firms that generate bulk payment lists from case management or accounting software for CHAPS uploads may experience a greater impact.

Further details, including information about optional and future Purpose Codes, can be found here. 

Source: Today's Conveyancer and BOE Document