Gifted Deposit Receiving Money from Overseas

23/07/2015

Gifted Deposit Receiving Money from Overseas


Gifting deposits when buying a home is common practice, in fact 4 out of 5 first time buyers get help from their parents when buying their first home. The challenges arise when receiving gifts from overseas as the Anti-Money Laundering (AML) checks become even more rigorous.

As you’ll have read in our article, 3 things you must do when gifting a deposit, you’ll understand that you need to ensure your solicitor has:

 Letter confirming the gift (Get a template Gifted Deposit Letter here);
ID (read what ID your solicitor needs here); and
 Proof of funds (Check how to prove source of funds here)

This criteria expands further when receiving money from overseas and the checks conducted by solicitors will be far more extensive.

IMPORTANT: If your proof of funds documents are not in written in English, then these will need to be translated into English.

Money-from-outside-EU.pngMoney received from outside the European Union (EU)

Money which originates from an EU or European Economic Area jurisdiction is regarded as coming from a trusted source because the funds, and the bank which holds them, will have been subject to a number of European Union directives which have to be adhered to subject to legal penalty. The European Economic Area includes the EU and Iceland, Lichtenstein, Norway and Switzerland (through various bilateral agreements).

The same cannot be assumed for money originating from non-EU sources. Because it is not subject to the same directives it is likely to be regarded with more suspicion which explains why solicitors require additional proof of the source of funds to satisfy their own Money Laundering Policies. There are certain high risk jurisdictions (countries) from which solicitors will be unable to accept funds, either directly or indirectly.

You must inform your solicitor immediately if you are looking to use money to purchase your home that originates from outside of the European Economic Area. There is an embargo on using money that originated from some countries outside the EU and you can see the current list of these countries - Sanction List Countries

Overseas Gifts - What additional information is required?

Whether you have overseas investments or parents who live in another country, in order for your solicitor to receive this, you’ll need to complete additional compliance checks to satisfy the solicitors’ Anti-Money Laundering procedures.

What needs to be explicitly explained are:

a. Who is sending the money; &
b. The source of the funds


Who is sending the money?

With identity (ID) checks in the UK the solicitors can use online tools to confirm the ID of a person based on a copy of their proof of address and proof of photo ID. For overseas clients this is not an option and the ID requirements are as follows:

Photo ID:
•    Passport
•    Driving Licence
•    National ID

Proof of Address:
•    Utility; &
•    Bank Statement (always useful to provide the same bank statement the money is coming from)

Each of these documents needs to be taken to a Notary Public or Solicitor to be certified. The Notary/Solicitor will verify the copies are a true likeness of the originals and that the person is a true likeness to the photo ID and will sign the copied documents and add their unique seal (if a notary).

These ID documents should be sent to your solicitors in hard copy; they can be scanned and emailed, however the originals will need to be received anyway before any money can be received by the solicitors.

The source of funds?Receiving-Money-from-Overseas.png
Where the money has come from is the most important question for any solicitors to understand and it is for you to prove. Whether it is an annuity, proceeds from a sale of a house or shares, divorce settlement or an insurance claim, all of these can be easily proved with supporting evidence.

To evidence where the gifted deposit has come from you should show:

when the money was received into the overseas account – a copy of the bank statement/s showing the bank account name, amount received and from who.
documents evidencing how these funds were accrued - Read How to prove source of funds

If the source of funds is outside the European Economic Area then your solicitor may require additional evidence for proof of funds.

“It's being gifted from savings"

If the gifted deposit is from a lifetime of savings, it would be reasonable to demonstrate how these savings have come about. Most solicitors will require 6 months of bank statements showing how the savings have been accrued. For most the savings will be from a ‘one-off’ receipt (as above) and the balance from smaller amounts added to it with interest being applied. If this is the case then supply evidence of both the ‘one-off’ receipt and also the last 6 months’ bank statements.

Failing to declare – What can happen?

Failing to declare isn’t an option and claiming that the funds have been in your account for a long time isn’t a valid answer to the question of where the funds have come from. Anti-Money Laundering procedures are there to stop money laundering which, if you are found guilty of, can carry a maximum 14 year jail term and an unlimited fine.

Banks do their own checks

It is important to note that if you are receiving money from overseas, you may also need to advise your UK bank account provider. Your bank may conduct their own investigations into the source of these funds, however any investigatory work your bank completes cannot negate the need for your solicitor to satisfy their own Anti-Money Laundering procedures.

Gifted Deposit Receiving Money from Overseas Checklist


1. Get ID Notarised from a local notary public in the country where the person sending the gifted deposit is resident
2. Get a letter from the person gifting confirming the money is a gift and not a loan – IMPORTANT If the person gifting you money isn’t your parent then you may find that your lender will not allow this. You can download a template letter here - Gifted Deposit Letter Template
3. Get proof of funds and the best advice is to provide as much evidence as possible as to where the money has come from.

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