The Anti-Money Laundering Process

To comply with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, Charnwood Borough Council is required to see proof of where funds have come from to purchase the property.

This guide provides information on the process to enable tenants to complete their application as quickly and accurately as possible.

Within the online application you will be asked some questions in relation to financing the purchase.

How will you be paying for the purchase?

You are asked how the property is going to be purchased i.e. Full Mortgage or Loan, Part Mortgage or Loan. You are to provide details and documents proving the source of monies to be used in purchasing your property under the Right to Buy scheme i.e. Method of purchase.

Proof of funding

Funding for your property must be proven in full. There are various things you can provide as proof of funds for buying a house and where your mortgage deposit came from. Common evidence includes signed contractual agreements, bank/savings account statements and certain forms of certification. The type of proof you must provide will depend on what you disclose as the source of the funds.  The most common sources of funding are discussed in full below:

Full mortgage or Loan

You must provide a copy of your mortgage in principle offer or copy of the mortgage offer where a mortgage is required.

A mortgage in principle is a statement from your adviser displaying how much you could borrow. This is usually based on your income and deposit.  However, this isn’t a mortgage offer. A Mortgage Offer in Principle demonstrates that you can obtain funding from a mortgage lender.

Mortgages

Please provide a copy of the mortgage offer or the mortgage agreement in principle. The mortgage offer/mortgage offer in principal will need to contain all of the following information:

• The address of the property
• The name(s) of the person(s) borrowing the money
• An expiry date sufficiently far into the future to allow the sale to complete

Please ensure that all of the pages of the mortgage in principal are present. If there is a covering letter for the offer, please also provide this. When all of the above is ready to be submitted, please refer to our guidance notes (issued with the form itself).

Loans

Loans must be accompanied by official loan paperwork. We cannot accept email confirmations of loans; official letters must be produced that specify the amount of the loan. Bank statements will need to be provided for at least a 12-month period (see above) showing the loan amount entering the account.

Part Mortgage or Loan

You must provide all the relevant documentations – as above.

Mortgage with a Saving Deposit

Where personal savings are being used, you will be asked to provide 12 months of bank account statements which demonstrate the funds gradually building up over time. If it’s an inheritance, you will need a document from the executors alongside bank statements showing the money arriving in your account.

Personal savings

Savings which are accumulated from regular (usually quite small) payments going into a savings account from your own income, such as salary, annuity or pensions. The evidence that is usually required for this form of deposit typically involves bank statements stretching back 12 months displaying regular payments coming from a valid income source that slowly grow the amount in your savings account. Where multiple bank accounts are involved, you should provide statements for each of them.

Savings and cash

Savings must be held in a UK bank or building society. You will need to produce at least 12 months’ statements to show you have the funds declared on page 2 of the declaration. Full branch copies of statements must be produced; we are unable to accept Internet print outs, ATM statements or pass books. If large amounts of cash are being stored at home for the purpose of purchasing the property, you will need to deposit these funds into a bank account and provide evidence of how these funds have accrued.

If there is an opening balance of £10,000 or more for an individual account (that is to say, the balance reads £10,000 or more on the first statement provided to us), you will need to provide five years’ worth of statements.

You will also need to produce official documentation (such as legal paperwork) for any deposits of £8,000 or more. However, we may ask for official documentation for deposits of less than this sum if there is a one-off deposit or regular payments to the account that do not have an obvious source.

Please note that all statements must, without exception, be in UK currency. This does mean in the case of money coming from overseas that you may have to pay to get documents translated and converted into pounds sterling.

If funds are coming from a business account, please provide a letter on letter headed paper from the business’s accountant stating that the funds showing on the bank statements are an accurate reflection of the business’s activities. The letter must be signed by hand and accompanied by at least 12 months’ statements from the business account.

Why do I have to prove where my deposit came from?

In the UK, mortgage borrowers are required by law to provide proof of identity, proof of address, and to disclose where their deposit has come from. There are strict anti-money laundering regulations which lenders and solicitors must adhere to, and there must be sufficient evidence that mortgage deposits are funded by legitimate, legal sources.

It is, therefore, a vital stage of the application process to provide proof of the source of your deposit. If your money comes from a non-approved source, you will be quickly be decline your application.

You must be honest in your application right from the start to ensure there are no unexpected obstacles. You will need to provide proof of the disclosed source of your mortgage deposit money, and both. Lenders and solicitors will carry out rigorous checks to confirm you have been truthful about the origins.

Gift

What are the rules of using a gift as a means to purchase the property?

The main thing when you’re using a gift is that you must prove the money is a gift, without expectation of repayment.

A Gifted Deposit Letter is usually all that’s required. For this, you must include:

• Their name
• Your name
• The total sum given
• A statement that it is a gift
• A statement that the gift has no commercial interest
• Confirmation that the gift giver has no financial or commercial stake in the property
• Confirmation that the gift giver is financially solvent and in a position to provide the gift

You need to have this letter signed by a witness too.

The person providing the gift will need to prove they have the funds to give you too. You must provide 12 months Bank statements, including evidence of the source of the money, should do this. If they’ve been saving for years and years, evidence of regular deposits into the account help with anti-money laundering checks. If it’s a result of an inheritance lump sum, you may need to provide a copy of the Will of the deceased.

The person providing the gift also needs to provide photo ID and two forms of address evidence (such as bank statements or Council Tax letters).

Please note within the evidence provided, the persons gifting must prove the money is a gift and must stipulate that they have no interest in the said property.

Acceptable ID documents from gifting parties include:

• UK passport
• Biometric Residence Permit with unlimited leave
• EEA/Swiss national passport/identity card
• Passport or travel document endorsed with unlimited leave
• Registration certificate or document certifying permanent residence of EEA/Swiss national
• UK immigration status document endorsed with unlimited leave
• EEA/Swiss family member Permanent Residence Card
• A certificate of naturalisation or registration as a British citizen

Inheritances

Similar to the above, in the event of funds coming from an inheritance, official paperwork must be produced showing the following:

• The name and address of the beneficiary
• The amount of the inheritance
• Bank statements will need to be provided for at least a 12-month period showing the inheritance amount entering the account.

Every person who is not a tenant but is contributing funds needs to complete this section.

Please note: For all instances where cash is being used to fund a property, the funds must be transferred into the tenant’s account prior to submission of your documentation.

Ownership of or Interest in Other Properties

If you own or have an “interest” in any other property? If Yes then Please provide details:

Court orders

Any tenant or family member who is subject to certain Court Orders (or who have a Court Hearing date pending) will not be eligible for the Right to Buy scheme until such time as the Order has ended.

Bankruptcy court order in place

In order to comply with Section 121 of the Housing Act 1985, we need to establish any person(s) to whom the Right to Buy belongs who may be an undischarged bankrupt person (or have made a composition or arrangement with his/her creditors), the terms of which remain unfulfilled, or who have a bankruptcy petition or receiving order pending. This is because in these circumstances the Right to Buy cannot be exercised until such an order or arrangement has been discharged.

Possession court order in place

If Yes please provide evidence.

Demotion of tenancy court order in place

If Yes please provide evidence.

Anti-Social Behaviour court order in place

If Yes please provide evidence.

Further checks

Depending on circumstances, further checks may be necessary. For example, if you are claiming Housing Benefit or receiving Universal Credit, your declaration will need to be assessed and approved by other services including the Tenancy Services Department. We will endeavour to forward the information on to these sections as soon as we are able, but please bear in mind that this could affect the timescale for processing your declaration.

Completion

Once your declaration has been processed by the relevant sections within the council, your documentation is then passed to Charnwood Borough Councils Legal section for a final check. You will receive notification from the Service to either confirm that we are satisfied with the paperwork provided and you will be given a guideline of when you can expect to hear about finalising the purchase or that additional information (if any) is required to provide the necessary assurance. Once our Legal section are in a position to proceed, they will liaise with your solicitors to arrange a completion date. At this stage, you should contact your solicitors if you have any queries.

Contact details

If you have any queries on your Right to Buy application or the Anti-Money Laundering process, please contact the Right to Buy office via email at Right.To.Buy@charnwood.gov.uk.