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 money from overseas and gifts 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)
• Proof of ID & address; (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.

Money 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.

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.

For any money that is received from overseas, you'll need to explain:

• 1
  Who is sending the money?
• 2
  Where did the money come from (source of funds)? and
• 3
  Is the money a gift or a loan?
• 4Who 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:

• Proof of ID (photo ID): Passport, Driving Licence, National ID

• Proof of Address: Utility bill (last 3 months), Bank Statement (always useful to provide the same bank statement the money is coming from).

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.

• 2Where did the money come from (source of funds)?

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 whom.

You will need to also provide documents evidencing how these funds were accrued - Read How to prove source of funds

• 3Is the money a gift or a loan?

If the money that is coming from overseas is from a parent, then they will need to declare whether the money is a:

• Gift; or
• a loan

If the money is a gift then your parents will need to follow the procedure here - Gifted Deposits.

If the money is a loan, then this need to be declared to your mortgage lender (if applicable) and a loan agreement should be drafted. Call us on 0333 344 3234 (local call charges apply) if you require a loan agreement.

If you are unsure whether the money you are receiving is a gift or a loan then read this article - Gifted deposit...or is it a loan from your parents?

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.

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.