Money laundering regualtions

80schild

Hello
Have just received a letter from the solicitor saying we need to prove we are able to pay the deposit of 10,000 and we need to provide a paper trail for it to comply with money laundering.
The money for this deposit (along with another 30,000 to pay back negative equity on the house we are selling) has been gifted to us by family. half the money came from my parents account and the other half from my husbands (whose family live in France) as they are in a finacial position to help us out.
How far back does this paper trail need to go-does it need to look at how my parents and husbands obtained their money (they both have good jobs and are in their 50s so they have lots of savings) or is it enough to show that it was paid from families account into ours.
Plus if we are saying its a gift from family are we forced to pay tax on it?

F_T_Buyer

usually just a bank statement will do. If it's a gift, you will probably need a letter from them saying it is a gift and they do not expect it back.

timmyt

80schild wrote: »

Hello
Have just received a letter from the solicitor saying we need to prove we are able to pay the deposit of 10,000 and we need to provide a paper trail for it to comply with money laundering.
The money for this deposit (along with another 30,000 to pay back negative equity on the house we are selling) has been gifted to us by family. half the money came from my parents account and the other half from my husbands (whose family live in France) as they are in a finacial position to help us out.
How far back does this paper trail need to go-does it need to look at how my parents and husbands obtained their money (they both have good jobs and are in their 50s so they have lots of savings) or is it enough to show that it was paid from families account into ours.
Plus if we are saying its a gift from family are we forced to pay tax on it?

they are wrong.

the lawyer needs to ID you, and the senders to them of any money. that is it.

Only if they suspect you are engaged in money laundering do they have to go further.

80schild

I think it is beacuse in theory people on mine and my husband's income and of our age would not be able to find this amount of cash out of thin air-therefore I guess it could be said we could be money launders.

We have no problem getting the paperwork together but what I am worried about is, if I say this money is a gift-will be be forced to pay tax on it? I can't make out it is a loan as that opens up the whole issue that for all they know my family could be loan sharks etc...

flora48

I do not think it is only beacuse of your age and circumstance. I had to tell my solicitor where funds had come from, in my case, my late father's estate, and she was satisfied with that. Asking for proof of funds and where they have come from is not unusual.

hazyjo

Money laundering regs apply to everyone so don't take it personally. New laws were brought in within the last 2 or 3 years (give or take a year, they all start blending into one!). Everyone had to sit through a rather boring lecture on it at work. Yawn...

Jx

tyllwyd

The UK doesn't have any gift tax, so there shouldn't be any tax to pay on money from your parents to you. (There might be implications for inheritance tax if they die within the next seven years, or there might be issues if there are care home fees to pay, but that's a separate issue.)

The money coming from France - that's more complicated because France does have a gift tax. You will need advice from someone who understands French tax law to find out if there is any tax to be paid.

80schild

Hi again
The solicitor has just got back to me and said she needs to report to the mortgage company that the funds have come from a third party in order to check that this does not affect our mortgage offer?
Does this type of thing usually affect a mortgage offer-its not liking I am using a credit card or dodgy loan! Surely it can't be that rare parents helping their children with the deposit.

Jebrelli

My partner's father gave us the deposit for our flat. He had to fill out a Deed of Gift, stating he had no further interest in the property, and the solicitor wanted copies of the money entering our account in addition to the original source of the money (in this case, sale of a house).

If the original source is savings etc, then a couple of bank statements showing the money accruing should be sufficient - but obviously you will need to check this with the solicitor.

Regarding the mortgage etc - that's perfectly normal and is very unlikely to affect you at all. The mortgage company simply needs to know that there will not be another third party interest over the property should they need to repossess it (again, a Deed of Gift is sufficient).

mustrum_ridcully

80schild wrote: »

Hi again
The solicitor has just got back to me and said she needs to report to the mortgage company that the funds have come from a third party in order to check that this does not affect our mortgage offer?
Does this type of thing usually affect a mortgage offer-its not liking I am using a credit card or dodgy loan! Surely it can't be that rare parents helping their children with the deposit.

I'm sure it's not rare parents giving gifts. BUT in these days of mega-careful lending the lenders are looking out for things like people using credit cards or non-secured loans to fund a deposit. Will the fact that the deposit comes from gifts from your parents have an impact - I honestly can't say, it depends on the lender and how much of credit risk you are.

Yorkie1

It is odd how different solicitors approach the same issue.

I had a gift from my parents towards my deposit. I declared this on both the mortgage application and to the solicitor (who of course acts on behalf of the mortgage company as well as the buyer in most cases).

She asked Mum and Dad to write a letter to confirm it was a gift and that they had taken legal advice on the implications of doing so / had not taken legal advice but were happy to proceed nonetheless (deleted as appropriate). The solicitor didn't want to see any of my bank accounts, nor theirs.

That satisfied all the ML Regs and the mortgage company.