Source of funds declaration: what to include when the money comes from crypto

What is a source of funds declaration?

A source of funds declaration is a document in which you explain where the money for a transaction comes from. Think of the deposit on a home, a large payment into your account or buying a business. You sign the declaration and attach evidence.

There is no official template. Every solicitor, conveyancer or bank uses its own form. The core is always the same: for each amount, the source, and for each source, a document that confirms it.

Why does your solicitor or bank ask where your money comes from?

Banks, solicitors and estate agents fall under the Money Laundering Regulations 2017. They must carry out customer due diligence and, under regulation 28, check the source of funds where necessary. So the question says nothing about you as a person. It is a duty of the firm.

Even so, it often feels different. Does it make you nervous that they keep asking, or does it feel as if you have to justify yourself? You are not the only one. Many people in your position have been there before you, and usually there is a good explanation that just needs to be put on paper properly.

Why is money from crypto harder to evidence?

With crypto, a firm wants to see an unbroken trail: from the pounds you bought with, through the exchange and any wallets of your own, to the payout into your bank account. That chain is less familiar to many solicitors and banks than a savings account. So they often look more critically, and sometimes enhanced due diligence follows.

A few signs that your evidence may lead to follow-up questions:

• you bought years ago, or you used several exchanges;
• an exchange no longer exists, or your account has been closed;
• you kept crypto in your own wallet and moved it between addresses;
• the proceeds are much higher than what you originally put in.

If one or more of these points sounds familiar, that does not mean something is wrong. It may be perfectly fine. There may also be a gap you cannot see yourself. You only know for sure once someone has properly looked at it.

Would you rather be certain now? Let Paucitas look at your situation before the solicitor or bank asks more. Get in touch or call +31 20 244 5774.

What if the chain is incomplete?

That happens more often than you might think, and it is rarely the end of the story. Transactions on the blockchain stay public. Starting from known wallet addresses, the route can often be traced back, even if an exchange has since disappeared. In practice, Paucitas regularly finds that more can be shown than the client thought.

So only fill in what you can back up. An honest gap with a clear explanation usually works better than a declaration that later turns out to be wrong. Not sure your documents fit together? Get in touch with Paucitas first, before you sign anything. More on missing history in reconstructing crypto history when the exchange has gone.

What if completion or a transfer has already stalled?

If the completion date slips or a transfer is waiting for an explanation, you will naturally want to move on quickly. A complete report can help get things moving again. Nobody can promise that in advance; it depends on the firm and on what can be shown. But with evidence anyone can follow, you are in a much stronger position than with a few loose screenshots.

Let Paucitas take a look first, so you know where you stand. With the report in hand, you can then talk to your solicitor, the bank or HMRC. More on buying a home in particular in money from crypto when buying a home.

What Paucitas does for you

Paucitas works out what is needed for the crypto part of your declaration: the transactions, the route of the money from what you paid in to what you cashed out, the exchanges and wallets, the documents and the timeline. Paucitas reads through not only documents but also emails, messages and other communication, for example with your exchange or bank. That gives a complete picture, with a timeline of where all the money came from and where it went, step by step. Paucitas turns that into a report that anyone can follow and understand step by step. You attach that report to your declaration.

• What you can expect: an honest picture of what can be shown, and where needed a clear explanation of what is missing.
• What you can provide: whatever you have, such as bank statements, exchange statements and wallet addresses. Never your recovery phrase. If something is missing, Paucitas works through it with you.
• Costs: every investigation is tailored. You receive a custom quote in advance that we go through together, with no surprises.
• Turnaround: from the same day to about two weeks. So ideally start well before your completion date.

Paucitas does not give tax advice. Paucitas provides the evidence; you sign the declaration yourself, and you discuss tax questions with your adviser.

Sources: legislation.gov.uk, Money Laundering Regulations 2017, regulation 8; legislation.gov.uk, Money Laundering Regulations 2017, regulation 28.