Money laundering

Question 1

What are the legal consideration for gift deposit

Answer 1

Solicitor will ask client to complete a gift deposit statutory declaration to confirm

• the sum is a gift not a loan
• the donor will not acquire any interest in the property
• the donor is not bankrupt and do not know of any circumstances at the time of making gift that would make them bankrupt in the future

The letter is a legal document sworn under Statutory Declaration Act 1835.

Question 2

How does buyer’s solicitor protect lender’s interest

Answer 2

Buyer’s solicitor need to check the donor is not a bankrupt, we don’t want official receiver to claim money back from the buyer.

Buyer’s solicitor will arrange for an insolvency indemnity insurance relating to the donor’s bankruptcy. Insolvency indemnity insurance protects against the risk of a gifted deposit being overturned if the donor goes bankrupt. It’s usually required by mortgage lenders.

Obtaining evidence of source of funds from the donor.

Obtain and check the identity and the address of the donor.

Recording the Gift in the Transaction
* On the Completion Statement: The gifted deposit should be shown as part of the purchase funds.
* In the Transfer documentation: Usually, nothing is noted about gifts directly on the title. However, internally, it’s recorded clearly