Case study: mortgage approved thanks to a watertight asset verification

What was the situation in this case?

A buyer wanted to pay part of her deposit from crypto built up over several years. In that time she had moved money from her bank account to an exchange, traded there and moved part of it to her own wallet. When she applied, the amount was ready to be sold.

Paucitas takes privacy very seriously and never shares clients’ personal details. This is a composite example: names, amounts and details have been changed. The situation is one we see in practice.

Why does a lender ask about crypto as a mortgage deposit?

Under the Money Laundering Regulations 2017, banks and lenders must carry out customer due diligence: they need to know where their customer’s money comes from. For savings, a bank statement is often enough. With crypto, the lender only saw a balance at an exchange, with no view of how it got there.

So the doubt was not about any suspicion of wrongdoing. What was missing was evidence the lender could check for itself. That applies to every lender: online and app-based banks more often use quick digital checks, traditional high-street banks more often work through an adviser, but all of them are bound by the same rules. The FCA explains this in its cryptoasset anti-money laundering regime. More in why your bank asks about the origin of crypto.

Facing the same question? Let Paucitas take a look with you. You can ring any time, 24/7, on +31 20 244 5774.

How did the asset verification work?

Paucitas followed the money from the first deposit to the amount used as the deposit. In outline:

• Everything mapped: every wallet and exchange account the buyer had ever used, including accounts that were no longer active.
• Money in: which amounts were deposited when, with the bank statements alongside.
• Linked to the blockchain: every step linked to a transaction hash, so each one could be checked on its own.
• One report: the whole route in order, stating how far it was established.

Paucitas does all the tracing itself, without tracing tools. We look into everything: the transactions, the route of the money, the platforms, the documents and the timeline. Paucitas also reads through your emails, messages and other communication with platforms, so the full picture emerges of where the money came from and where it went, step by step. The result is a report anyone can follow and understand step by step.

What tipped the balance for the mortgage application?

The origin was no longer an open question but a route the lender’s underwriter could follow for themselves: which amount went in when, how it moved and how the final balance came about. From then on the conversation was no longer about trust but about facts. The lender accepted the deposit.

To be fair: the decision always lies with the lender. A report gives the bank something solid to rely on, but Paucitas does not promise that a lender will accept your deposit. What we do is say honestly what is established and what is not. That often inspires more confidence than a file that seems to know everything.

Who verifies crypto as a mortgage deposit?

Paucitas. If you already have your own overview, or one from an adviser, Paucitas can also check it independently. That shows whether the evidence holds up and where the gaps are. For business owners the overview can be set up per entity, so it stays clear what is personal and what belongs to the company.

With one exchange and a short history, your own statements sometimes get you a long way. If you have several wallets, need to go back years or the lender asks for independent evidence, it is wise to let Paucitas take a look.

• Cost: every investigation is tailored. You receive a tailored quote in advance that we go through together, with no surprises.
• Turnaround: from the same day to around two weeks. Plan it well before your mortgage offer or exchange deadline.
• No tax advice: Paucitas provides the evidence; questions about tax you discuss with your adviser.

Further reading: building a source of funds file for your bank and frequently asked questions on crypto asset verification. More about this service in proving the origin of assets.

Want to know what your lender is still missing? Get in touch for a free intake, or ring +31 20 244 5774. Via the form you will hear from us within 1 to 3 hours.

Sources: The Money Laundering Regulations 2017, regulation 28; FCA, cryptoasset AML and CTF regime.