Anti Money Laundering - Gifted Deposit

[IKnowAristotle]

Is anyone able to provide some general advice/experience about the level of information required regarding source of funds for a deposit?

The context is my mother is providing a gifted deposit of 70k for our purchase and obviously we're very grateful.

The solicitors have asked for confirmation of funds. Bank statements were provided and some kind of open banking setup which should enable them to view the account I believe. This was in May.

They asked for further information where the money came from. We provided further details and copies of a will from when she inherited money from an elderly relative about 10 years ago. Were told this was all fine.

Another request in August to ask where the money has come from. She went into the bank and they provided internal statements detailing every transaction since the account was opened.

We are due to go sign contracts tomorrow and the solicitors have emailed her today with further questions about transactions on the account.

I used to work in financial services so fully understand money laundering obligations but this seems so far beyond reasonable. I genuinely don't see what further information we can provide them to prove that this money comes from a legitimate source.

I'm really worried this is going to impact on my purchase.

Any advice on how to approach the meeting with the solicitors tomorrow to progress the issue?

Has she written a letter that's been authenticated by a solicitor to say it's a gift not a loan? That was crucial for us.

Yes, that's been provided to the mortgage lender also.

We had to have a letter stating it was a gift etc

That sounds excessive. I would assume there is miscommunication within the solicitors, the records of the AML check have been mislaid between May and August , or some junior has just been on a course and got a bit giddy.

The thing with solicitors is they fanny about for ages and magically pull everything together at the 11th hour (apologies to any reading) . If it were me I’d be on the phone at 9am asking them to confirm it’s sorted so you can come in and sign.

I have just been through this. My parents gifted me the money to buy a house. At one point I thought they may revoke their offer as they had to provide so much information (my mother previously worked in financial services). Have you provided all of the proof of ID? We just kept answering all of the questions and being honest and eventually we got there. It was so tough as my parents case it was savings. They live a very frugal life. Good luck.

My mother also gifted us money for a deposit - not as much as you but was still over £10k. She had to write and sign a letter explaining she was gifting the money to us. She had to present this with her ID at the bank we were using. We never had any issues with this, it was accepted and not mentioned again?

AML guidance was updated in April so posters with transactions before this would have had less stringent requirements. You just have to continue to jump through the hoops unfortunately.

https://www.lawsociety.org.uk/topics/anti-money-laundering

We had the same thing made difficult as my parents gifted us from the sale of one of their buy to lets which they then invested all over the show in premium bonds and shares. They needed to know the ins and outs of a ducks bum. Wanted the completion statement from sale of buy to let then 3 months of the premium bonds, brokerage receipts and statements from the shares then six months statements from my mums bank account when the money finally landed once everything had been cashed in. Made even worse as mum and dad had split everything into accounts in their sole names and one in a joint name. It’s fairly standard for anything over £10k, I worked in conveyancing and obviously money laundering regs are there for a reason. Property is a very good way to put dirty money so they do have to be quite extensive in their audit. So long as there’s nothing untoward you have nothing to worry about.

I'm happy to provide whatever I/we can but I'm worried that they're asking for things that aren't feasible. I'm surprised we managed to get records beyond 6 years and now they're asking about transactions that happened in 2017 etc.

I know I would say this but my mother isn't trying to launder money 10 years after receiving it. She's just a widow who's inherited and never spends anything.

I had this a couple of years ago with a gift from my dad towards my deposit. My solicitors, in their wisdom, left it until six months into the process to request the AML checks (there were Land Registry delays post-lockdown) and it caused so much stress. The money had come from my maternal grandmother to my parents in 2014 but my mother died a couple of years later, leaving my dad to try to go through their banking records. It felt like just as we’d pulled together what they’d asked for, they would demand something else, and the final straw was them saying they needed an original copy of my grandmother’s will. My aunt was executor but she had moved house since and had no idea where it was. Solicitors wouldn’t budge until finally I sent a link to the will on the probate registry and said if a copy was good enough for the government, why wasn’t it good enough for them? I said it was threatening the entire purchase and I’d had enough and suddenly someone at the firm saw sense and said we’d sent enough proof.

There must be a better way. As if buying a house in England isn’t stressful enough already.

Anyway, good luck!

Also I’d argue that for tax purposes you’re only required to keep financial records for 6 years or so, so going back to 2017 is more than any business would need to do, and there must be plenty of money laundering through businesses.

(Do check this though!)

This sounds excessive to me. Different solicitors seem to want different things. Last year I had to write a letter confirming the details of a payment I had made (as executor) to a family member, who was giving some of it to her son to use as a deposit.

However, only last month, we gave our daughter a substantial deposit (more than the £70k in the OP’s case) for a flat and didn’t need to provide nearly as much information.

We had to take in ID and sign a form to say it was a gift and we also had to say where the money had come from but were not asked to provide details of accounts going back years.

I had a similar nightmare with trying to prove source of funds earlier this year when I bought a house. It’s so ludicrous as the fraudsters know how to game the system and provide whatever fraudulent documentation they need, unlike ordinary people who are desperately trying to prove the source of legitimate funds.

A friend of mine had to lend her nephew a big chunk of money last year at the last minute as she could prove the source of her funds and her retired, widowed sister (the guy’s mother) couldn’t meet the proof requirements to gift him the deposit. The sister then paid my friend back as soon as the sale went through. Pointless and stressful for everyone.

Pretty sure the bank doesn't allow loans to make up for the deposit. The easiest is to go for a bigger mortgage and pay it back gradually with the excess savings. You can remortgage later at lower LTV.

I've just been through this - utter nightmare. the solicitors insisted on bank statements from 2013 which neither I nor the bank could provide. I was so lucky that I had kept some old building society passbooks from 2013 which did provide some evidence. The whole process is very invasive and all financial privacy is lost. I have learned never to throw any financial documents away no matter how old! There must be an easier way ....

"The whole process is very invasive and all financial privacy is lost."

I think this is the key point and mum definitely feels like she's being accused of something.

Fingers crossed for solicitors meeting today.

Ok, solicitor agrees the whole thing is unnecessary and intrusive but she thinks it all fine and we can complete next week. Hurray.

@IKnowAristotle so who is asking for it? The other side solicitor?

It is a really bonkers process. I know someone who was gifted a deposit by her mum last year, so before this April thing that's been mentioned here. And transactions between her and her mum were actually questioned. You know like loaning 70 quid before payday.

They really need to do something because this stuff is getting completely out of hand now.

I had to do something were using mum's power-of-attorney recently and I was told that the document was too old it was done in 2019. So I had to pay a solicitor to recertify it.

This does sound excessive.
We gave DC £50k each for deposits 5 years ago. DC2 has only just got round to buying and essentially had to prove he'd had the money for at least a year. He just showed bank statements. It was tricky because he moves his money around a lot to maximise interest.

@IKnowAristotle forgot to say good luck tomorrow

Also - 🎤 brand, new, full, throttle 🥰

Our solicitors blamed the new regulations that came in in April - she thinks it's completely slowed down conveyancing.