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Is documentation for the provenance of funds, typically required in all cash real estate transactions?

by ahnick 5y ago

nradov 5y ago
Generally cash real estate transactions aren't subject to most KYC / AML rules. But the US federal government recognizes that as a problem and is working on tightening enforcement. https://legal.thomsonreuters.com/en/insights/articles/u-s-regulators-tackle-money-laundering-luxury-home-market https://legal.thomsonreuters.com/en/insights/articles/u-s-re...
- JoshTriplett 5y ago
  > Generally cash real estate transactions aren't subject to most KYC / AML rules. That's not entirely true. The bank wants to know enough information to make sure that the cash came from the buyer, and not from someone else other than the buyer, for AML reasons as well as creditworthiness. So they do seek proof of the provenance of the cash sufficient to demonstrate that it actually came from the buyer. (Source: detailed conversations with bankers when buying a home.)
  - toomuchtodo 5y ago
    Proof of source of cash funds in a real estate transaction is required because if the house is bought with illegal drug proceeds, the collateral can be seized by the Feds, leaving the note investors holding the bag. The policy originated in the 80s. https://www.washingtonpost.com/archive/realestate/1989/05/06/lenders-seek-to-avoid-drug-linked-borrowers/93ac6801-d57c-46dd-87ad-24bb49b367c4/ https://www.washingtonpost.com/archive/realestate/1989/05/06... (family member is a mortgage underwriter)
    - nradov 5y ago
      That only applies if the buyer applies for a mortgage. The question was about cash transactions.
      - deleted 5y ago
        [deleted]
    - oenetan 5y ago
      https://archive.is/30d06 https://archive.is/30d06
ipython 5y ago
I was required to disclose the source of my down payment funds when purchasing my house. They asked where the funds came from since my bank statement just showed a deposit in that amount in one block. It took a while to convince them that it was not a gift or another loan to pay off.

Is documentation for the provenance of funds, typically required in all cash real estate transactions?

by ahnick 5y ago

Is documentation for the provenance of funds, typically required in all cash real estate transactions?

Generally cash real estate transactions aren't subject to most KYC / AML rules. But the US federal government recognizes that as a problem and is working on tightening enforcement. https://legal.thomsonreuters.com/en/insights/articles/u-s-regulators-tackle-money-laundering-luxury-home-market https://legal.thomsonreuters.com/en/insights/articles/u-s-re...

JoshTriplett 5y ago
> Generally cash real estate transactions aren't subject to most KYC / AML rules. That's not entirely true. The bank wants to know enough information to make sure that the cash came from the buyer, and not from someone else other than the buyer, for AML reasons as well as creditworthiness. So they do seek proof of the provenance of the cash sufficient to demonstrate that it actually came from the buyer. (Source: detailed conversations with bankers when buying a home.)
- toomuchtodo 5y ago
  Proof of source of cash funds in a real estate transaction is required because if the house is bought with illegal drug proceeds, the collateral can be seized by the Feds, leaving the note investors holding the bag. The policy originated in the 80s. https://www.washingtonpost.com/archive/realestate/1989/05/06/lenders-seek-to-avoid-drug-linked-borrowers/93ac6801-d57c-46dd-87ad-24bb49b367c4/ https://www.washingtonpost.com/archive/realestate/1989/05/06... (family member is a mortgage underwriter)
  - nradov 5y ago
    That only applies if the buyer applies for a mortgage. The question was about cash transactions.
    - deleted 5y ago
      [deleted]
  - oenetan 5y ago
    https://archive.is/30d06 https://archive.is/30d06

ipython 5y ago

I was required to disclose the source of my down payment funds when purchasing my house. They asked where the funds came from since my bank statement just showed a deposit in that amount in one block. It took a while to convince them that it was not a gift or another loan to pay off.