The mortgage lender does not accept my exchange statement, what is needed instead?

Why is an exchange statement rejected?

An exchange statement is rejected because it shows a balance on a reference date and does not show where that balance comes from. For a mortgage lender that difference is essential: the balance is an outcome, while the assessment concerns the source of the funds you contribute.

Financial institutions tailor their review of clients and funds to the risks they see. De Nederlandsche Bank describes how institutions take measures to prevent money laundering and adjust their intensity to the type of client, product, transaction and country (DNB on integrity supervision). The European Banking Authority has extended its guidelines on risk factors with guidance for banks and other financial institutions dealing with crypto-assets, partly because of the speed of transactions and features that can conceal the identity of users (EBA on crypto-assets and risk factors).

That explains why a lender asks more questions about crypto than about a savings account, and why an exchange statement on its own is too narrow for that purpose. A full explanation of this type of process can be found on the page proving the origin of assets.

What is missing from the statement?

What an exchange statement almost always lacks is the connection with what happened outside that one exchange. The statement only knows the platform’s own entries and knows nothing about your bank account, other exchanges or wallets you manage yourself.

In the files Paucitas handles, four gaps keep recurring:

• The deposits are not linked. The statement shows purchases, but not with what money and from which account they were made.
• Crypto came in from outside. A deposit from an external address appears on the statement as a receipt, without explaining whose address it is and how the crypto got there.
• The period is incomplete. The statement covers one or two years, while the first purchases go back further.
• The gain is not explained. The balance is much higher than the deposits, and the statement does not show in which steps that increase in value lies.

What does not help in that situation is supplying more of the same. A second exchange statement, a screenshot of the app or an export from a portfolio tracker tells the lender again what the balance is, not how it came about. A portfolio tracker is also a calculation model of its own: it adds up what you enter, but does not check whether each transaction actually took place that way on the chain or at the exchange. The risk is that the application gets stuck a second time as a result, while the deadline for your purchase keeps running.

Each of those gaps can be closed in its own right. The concept that brings all of this together, origin of assets, is about exactly that chain from beginning to end.

What is needed per situation besides the exchange statement?

Which addition is needed depends on the gap the lender points out, and per situation that is a different piece of evidence. A clear breakdown prevents you from supplying too much on one point and too little on another.

• Only a balance supplied: the full transaction history of the exchange from the first deposit, linked to the bank statements showing the transfers to the exchange.
• Crypto received from an external address: an explanation of that address on the chain, with the route back to an earlier purchase or an earlier own wallet.
• Several exchanges used: a history per exchange, plus the transactions by which funds were moved between those exchanges.
• Large increase in value: a chronological overview of purchase, any swaps and sale, so that it is visible per step where the gain arose.

Anyone in a mortgage process will find the most frequently asked question on this point worked out on the question page proving the origin of crypto for a mortgage application.

Case. An applicant supplied a recent annual statement from his exchange to his lender. The statement was rejected: most of his balance had come in years earlier as a receipt from an external address, without further explanation.

In the reconstruction that external address turned out to be a wallet he managed himself and which he had funded at the time from another exchange. That first exchange still had the purchases in its history, and the bank statements from the same period showed the transfers. That closed the chain: euros from his account, purchase, transfer to his own wallet, forwarding to the current exchange, sale and payout to the account used for the home. The report opened with that last step, because that is where the lender started reading.

What does a reconstruction in four layers look like?

A Paucitas source of funds reconstruction consists of four layers which together describe the route from euro to crypto and back to euro. The order is fixed, so that each layer connects to the previous one.

1. Inflow: the transfers from your bank account to an exchange, with date and amount, linked to the corresponding purchases.
2. Build-up: the purchases, swaps and change in value within the exchange, in chronological order.
3. Transfer: the transactions between exchanges and your own wallets, recorded on the chain with transaction hash and demonstrated ownership.
4. Outflow: the sale and the payout to the account you use for the purchase.

The outflow connects directly to what the lender itself sees: the amount in your account. That is why that layer comes first in the report summary, and the rest of the report works back to the inflow. Paucitas verifies each step in that chain separately, so that a reader can see for every amount where it came from.

The limit. Transactions outside the blockchain, such as cash payments or internal bookings within an exchange, are not visible in blockchain data. They are only included if underlying documents are available.

How does Paucitas handle a rejected statement?

Paucitas starts with the rejection of the exchange statement itself: which gap has the lender pointed out, and which layer of the reconstruction is missing as a result. From there it is determined what needs to be supplied and what can be established on the chain itself.

Data is supplied digitally or at the office. Per case a delivery list is provided which states what data is needed. Where necessary Paucitas guides the collection and delivery of that data.

Paucitas works with a fixed fee based on your situation. Sometimes, by agreement, we use an hourly rate, but the hours are always fixed in advance, so that you are never faced with surprises. No investigation is started until the costs have been discussed and approved.

A Paucitas investigation takes between one working day and two weeks, depending on the size of the file and the urgency. An urgent report can be delivered within one working day and in exceptional cases the same day. A regular investigation is usually ready within three working days. For files with many transactions, several wallets or missing history, the lead time rises to around two weeks. A surcharge applies to urgent assignments.

How we guide private individuals in a mortgage process can be read on the page for private individuals. If the deadline for your purchase is running and your statement has been rejected, Paucitas establishes the missing layers and delivers the reconstruction you can submit to your lender; see source of funds. How a comparable process worked out in practice can be read in the related blog case: mortgage approved thanks to conclusive asset verification. For your own situation, contact Paucitas.