Verifying Your Source Of Funds
Verifying your source of funds used to purchase real estate has recently come under scrutiny. It seems every day more information comes to light about the extent of money laundering in British Columbia. It appears billions of dollars have been laundered through B.C. casinos by criminal organizations.
After decades of status quo, the Government has eventually started to address this pressing issue. The Real Estate market has been a favourite target for money launderers in Metro Vancouver. A public inquiry is in the early stages and won’t be completed until 2021.
REGULATIONS IN PLACE TODAY
Current regulations require a full 30-day history of funds to verify the source. However, almost every lender requires a full 90-day history from all account where funds will be drawn from to purchase real estate. Any deposits or transfer unrelated to employment income must be verified. All account statements must clearly show your name and account number.
TRANSFERRING FUNDS BETWEEN ACCOUNTS
The majority of home buyers have funds spread out over multiple accounts. If you transfer money from one account to another, be prepared to show a full 90-day history from all accounts.
For example, you have $20,000 in your Savings and $15,000 in your tax-free savings account. You want to transfer those funds into your chequing account where you have an additional $20,000. You need $40,000 as a down-payment to complete your new home purchase.
In this example, verifying your source of funds will require a full 90-day history from all three accounts. You will need to provide a 90-day history from your savings, TFSA and chequing accounts. The statements must show the transfers from one account and landing in the other account. This is referred to as sourcing your funds.
RULES ARE HERE TO STAY
Most people find this frustrating. The overwhelming majority aren’t taking part in suspicious activity. One important factor to understand is the lender isn’t doing this because they feel like. The Government requires this in order to verify the source of your funds is legitimate.
Armed with this info, just be prepared to provide your statements.
Lenders are required to source down payment funds and with more and more news coming out every month on money laundering, the rules may only get more rigid. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.