Why is my bank suddenly asking about the origin of my crypto?
Date: | Week: 35 | Reading time: 7 minutes | Updated: Author: Tyler Dijst
In short
Is your bank asking about the origin of crypto you bought or sold? That is usually a standard check, not an accusation. Banks are required by law to know where money comes from. Whether your own records answer that question depends on how you started and which route the money took.
Paucitas is an independent expert firm in the Netherlands that establishes the origin and legitimacy of crypto wealth, in hundreds of cases a year. Questions about the source of funds usually come from the bank or the tax authority. We often find there is more to back up than people thought.
Get in touch with Paucitas or ring +31 20 244 5774. You will soon know what your bank is still missing and how to fill the gap.
In a nutshell
A question from your bank about crypto can feel like distrust, but it is usually a legal duty. What counts is a story that closes with records: from your first deposit to the money in your account. Paucitas puts that in order for you, in a report your bank can follow step by step.
You want to move money from crypto into your bank account, or you have just done so. Then a letter or a message arrives: can you show where the money came from? Perhaps a payment has been put on hold. That is stressful, especially when a lot of money is involved. You are not the only one. Many people bought crypto years ago and did not keep track of everything at the time.
Has your explanation already been turned down? Then also read why a bank rejects an explanation of origin.
Bank asking about the origin of crypto: why now?
Because the law requires it. Under the Money Laundering Regulations 2017, banks must carry out customer due diligence: they need to know who their customer is and where the money comes from. With money from crypto, a bank often looks more closely, because the route is less obvious than with a salary. The FCA explains how this works for crypto in its cryptoasset anti-money laundering regime. More background is in KYC and AML.
This applies to every bank. Online and app-based banks sometimes use faster, automated checks and ask for documents through the app. Traditional high-street banks more often get in touch through an adviser. But all banks are bound by the same rules. A question is therefore not a judgement about you. It is a check the bank has to carry out.
What does the bank want to see as proof of your crypto?
It varies by bank and by amount, but it usually comes down to four things:
- Where it started: the money you once used to buy crypto, with bank statements.
- Where it was held: statements from every exchange and wallet you used.
- How it moved: the route of your crypto, with a transaction hash for each step.
- Where it lands now: the sale and the payment into your own account.
A loose overview or a screenshot rarely convinces a bank. Records that link up do. Which documents banks usually ask for is also covered in which documents your bank needs for money from crypto.
Not sure whether your records are enough? Let Paucitas take a look with you. You can ring any time, 24/7, on +31 20 244 5774.
Your bank is asking about one specific transaction: what now?
Sometimes it is not about all your savings but about a single transfer. A payment is held back, or your account is temporarily frozen. That can be very frustrating. Even then, the answer is the same: show where that one amount came from, right back to the source. What to do if your bank freezes your account is covered in what to do when your bank blocks your account over crypto.
A tip: it is better not to give the bank half a story under time pressure. An answer that later turns out to be wrong makes things harder. One complete file is better.
An example from practice
A woman sold crypto she had bought in 2017 and wanted to use the money for a house deposit. Her bank held back the transfer and asked where the money came from. She still had bank statements from the first purchase, but the platform she had used no longer existed.
Using her statements and the blockchain, Paucitas traced the route back to her own wallet and the sale. She was able to give the bank a report the adviser could follow step by step.
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.
Who can help when your bank questions where your crypto came from?
Paucitas. We look into everything for you: 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 you get the full picture of where the money came from and where it went, step by step. Paucitas does all tracing itself, without tracing tools. You receive a report that anyone can follow and understand step by step, including the adviser at your bank.
A report gives the bank something solid to work with, but the bank decides for itself. We therefore do not promise that a bank will accept your records. We are honest about what is established and what is not. That often builds more trust than a file that seems to know everything.
- Costs: every investigation is tailored. You receive a tailored quote in advance, which we go through together, with no surprises.
- Turnaround: from the same day to around two weeks.
- No tax advice: Paucitas provides the evidence; your tax return stays with you or your adviser. How HMRC treats crypto is explained on GOV.UK.
Buying a home? Then read a mortgage with money from crypto. If you want to start on a file yourself, the step-by-step plan for a proof-of-origin file will help. More about this service is on proving the origin of assets.
Want to know what your bank is still missing? Get in touch for a free intake, or ring +31 20 244 5774. Through the form, you will hear from us within 1 to 3 hours.
Sources: legislation.gov.uk, Money Laundering Regulations 2017, regulation 28; FCA, cryptoasset AML and CTF regime; GOV.UK, tax on cryptoassets.
Do you have questions about this blog?
Feel free to get in touch with Paucitas. Paucitas can be reached by phone 24/7, including evenings and weekends. Through the contact form we usually reply within 1 to 3 hours, and we answer e-mail within 24 hours.
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Frequently asked questions about your bank and the origin of your crypto
Is my bank allowed to ask where my crypto came from?
Paucitas explains that it is: under the Money Laundering Regulations, banks must know where their customers' money comes from. That applies to every bank, large or small. It is a standard check, not an accusation.
My bank has blocked a crypto transaction. Who can help prove the origin?
Paucitas sets out the route of that amount for you, right back to the source. You receive a report the bank can follow. Feel free to ring, also outside office hours.
Will my bank accept a report from Paucitas?
Paucitas points out that the bank always decides for itself. A report that shows every step does give the bank a great deal to go on. We say honestly what is and is not established.
What if I no longer have all my records?
Paucitas sees that a lot. Bank statements, your inbox and the blockchain itself remain. Together they often still make the origin plausible. In a free intake we look at what is possible in your case.
Does Paucitas also help with a mortgage or a solicitor?
Paucitas helps with that too. The same evidence works for the bank, the mortgage lender and the solicitor or conveyancer. Every investigation is tailored, with a tailored quote in advance.
From Amsterdam, for the whole of the UK
Everything can be done fully online. Prefer to meet in person? You are very welcome at our office in Amsterdam, by appointment.
Paucitas is an independent expert firm based in the Netherlands that, for clients across the UK, investigates investment fraud and crypto fraud, establishes the origin and legitimacy of crypto assets and prepares expert reports for legal proceedings and compliance.
Your own situation
If you are reading this, you probably have a question about your own situation. That is exactly what Paucitas does.
The first step is contact by phone. You can book that call by phone or through the contact form, so you do not have to wait. In the call we look together at what can factually be established in your case and what Paucitas can examine for you.