Comment by tim333 3 days ago
The money laundering control systems, as well as being ineffective at controlling crime can be a pain in the neck for the law abiding. I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds. Trying going to your bank to get records from five years ago often gives a date out of range error.
It wasn't in cash. It was in equities to a large extent. But they still ask for the source. Even if it's from selling shares they want to know where the shares came from. At least sort of. The whole thing is a box ticking exercise for compliance to cover their own arses.
In fact it's worse than that in some ways as I had an investment advisor who bought and sold stuff and I don't know if I have records of what exactly.
>It wasn't in cash. It was in equities to a large extent. But they still ask for the source.
And saying "gift from dead parents" wasn't enough to placate them? They wanted receipts? I get asked about source of funds all the time, but I don't think I've ever been asked to provide proof.
How it works, I'm in the UK, is the government passed a law saying lawyers are responsible for knowing the source of fund and can be fined if they don't do it. It isn't really spelled out how you are supposed to prove the source. In the end I found some paperwork from a more recent source of funds and used that. It's not very organised - they just want some bit of paper in their files saying source was x in case the government has a go at them.
The proof I did use - a more recent inheritance, I could probably use multiple times as there doesn't seem any check on you doing that. The system is not very organized.
The point is to raise the barriers/cost of business high enough so that the larger criminal enterprises do not have competition from the smaller ones. Ensuring the greatest threats become even bigger ones, but also that any corrupt politicians/officials/bankers get even bigger payouts and the payouts they get are more predictable from fewer channels.
>The point is to raise the barriers/cost of business high enough so that the larger criminal enterprises do not have competition from the smaller ones.
You can make the same argument about literally any crime deterrence measure though? For instance having drug search dogs at airports probably makes it harder for the indie drug trafficker to get drugs through, but probably isn't going to do much against organized crime networks with insiders working at the airports and/or bribed officials.
Ignoring the obvious problems with drug dogs, which I have a very personal extremely degrading and humiliating tale about involving a fraudulent search warrant that turned up nothing, a key difference here is the thing being monitored here is primae facie legal and involving forcing private parties to be the drug dog handler on behalf of the government on private property in a private transaction. In such case there is a presumption of innocence and government should need a warrant before requiring client to satisfy AML or KYC documentation.
I can't just walk up to your doorstep, make your sister take my drug dog, and force her to walk it around your bedroom and then punish her if she doesn't do it.
> In such case there is a presumption of innocence and government should need a warrant before requiring client to satisfy AML or KYC documentation.
But since you don't know when the government is going to ask for it, you need to collect it from everyone all the time, otherwise you won't have it to satisfy the request. "What do you mean you don't know who your customers are?" is not a question you want to have to answer in the face of a warrant.
> The better question is why are you were sitting on cash for 40 years.
That's not a better question; that's just ignoring reality. Who cares why they were sitting on cash for 40 years? People should be able to do whatever they want with their money, even if it's not the most financially advantageous thing.
I don’t think that really is the better question. It’s their money, if they want to do silly things with it that’s up to them.
Yes, but they are now aiming to use these funds to buy real estate and of course that is going to raise a bunch of flags. If the government would accept this without challenge criminals would suddenly be left all kinds of crazy inheritances. At a minimum you'd expect some documentation of how that money landed in their possession in the first place, for instance a will, a final balance of an estate and so on.
I've handled a couple of these for family members and the amount of paperwork around even a minor inheritance can be pretty impressive.
I'd expect a presumption of innocence, and at the very least I'd expect some documentation from the government showing probable cause of a specific crime the money was involved in before blocking the transaction. The presumptive innocent party shouldn't have to provide anything by default.
If I get the OP correctly it wasn't 'cash' that they were sitting on but it was a balance in a bank account. You can turn that into cash (unless lots of other people try to do the same thing at the same time, see also 'bank run') but strictly speaking it isn't cash.
Nobody is questioning the source of funds for the balance in a bank account that’s been there for forty years.
OP could literally just put it in the bank, sit on it for a year, and there’d be zero questions. They are mostly only interested in knowing that you didn’t get this money from a different loan that they aren’t aware of (like a personal loan, or one you got two days ago that hasn’t yet been reported).
"Sorry, you didn't invest your money optimally, so we confiscated it all"
Okay...
> I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds.
This makes zero sense.
I have bought a house, and they want bank records going back like a few months or maybe a year at most. If that money has been sitting in an account for that long, nobody gives a shit where it originally came from. Like, if you had $100,000 for a down payment, they’re not checking the last twenty years of your paystubs to make sure the math checks out.
The only thing they really are interested in is knowing this money didn’t just appear out of nowhere because you got a personal loan from someone or because you got a conventional loan from a lender that hasn’t reported it to a credit reporting agency yet, and which would affect the decision to underwrite your loan.
If you’ve just been holding on to large sums of literal cash dollar bills for the last 40 years, that is such a comically ridiculous financial decision I don’t even know what to tell you.
> I have bought a house, and they want bank records going back like a few months or maybe a year at most.
I had to juggle with this a little bit because I had sold some crypto for the down payment, but it's crypto that I had been keeping in a hardware wallet for years. As a result, I could certainly generate records showing how long I'd had it, but they'd be my own records based on the blockchain--not from any bank.
They ended up accepting transaction records from Coinbase, though even those mostly just showed some Bitcoin being received into the account and then being sold before transferred to the bank. But I guess that was enough for them.
In any case: I did ask about it and they told me it wasn't actually for KYC laws or money laundering. The reason they want a paper trail is to make sure you didn't actually just borrow the money from someone else. And that makes sense, since they're super picky about you not opening any new lines of credit while trying to close the mortgage.
That requirement isn’t about money laundering at all. They are wanting to make sure that you aren’t borrowing the down payment from someone else, because that would mean you don’t actually have as much (or any) of your own money invested in the property.
The point of a down payment is to make it so the borrower has an incentive to not default on the loan, because the borrower would lose the down payment.
If the down payment is actually borrowed money as well (like suppose you get a credit card advance for the money), then the borrower won’t lose anything if they stop paying the loan, and there is increased risk that the loan defaults.
You shouldn't really need to prove where you got them from; what the system cares about is that you're not laundering it, and it's obvious that nobody launders money on a multi-decade timescale. All you should need to satisfy them is just to show that you've been in possession of it for so long the bank can't even show where it came from anymore. That is itself proof that it's not laundering. You may have good success just pushing back a bit with this point.
One fun way to get around this is to have enough money to sidestep the bank altogether. The title company does not give a shit about where the money came from. All they will want to see is a screenshot of your current balance so they know you aren't wasting everyone's time.
I bought a cheap property (vacant land with no utilities) then built the house literally $20 or $1000 at a time buying blocks/wood/pipes etc as I was building. All the money was legally earned and taxed, but the point is even the title company was sidestepped in this case beyond an amount pretty trivial in comparison to the value of the property and very little of it would have had to of went through the traditional financial system in order to make it possible.
> but you try buying a house and they want proof of the origin of the funds
Fannie Mae's assessment criteria for origin of funds has a time limitation. If that money has been in an account you control, for forty years, "origin of funds" is not a question. I want to say the cut off is something like 36 months, but it may be even less.
Helpfully, all this information is public: https://selling-guide.fanniemae.com/sel/b3-4.3/verification-...
Wait until the wise people explain to you that generational wealth is inherently evil and this money should be forfeited anyway.
>The money laundering control systems, as well as being ineffective at controlling crime
The point of AML/KYC regulations isn't to stop all crime, just like the point of US sanctions on Russia isn't to stop all Russian exports. In both cases it's to raise the cost of doing business for the entity being targeted. In the case of Russia, they can still sell their oil to India or whatever, but at a steep discount. In the case of drug cartels, they can still get their funds into the regular banking system, but also at a steep discount. Smuggling pallets of dollar bills across the border and setting up a network of front companies is expensive. Doing all that also which implicate them in even more crimes, so even if there's no evidence of them smuggling fentanyl, they can be prosecuted purely on the basis of having a car full of cash.
>I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds.
The better question is why are you were sitting on cash for 40 years. In that time inflation already ate 66% of the value, and if you factor in the opportunity cost of not investing the money in stocks/bonds, the loss is even greater.