Buying Property in Gibraltar? Be Ready to Explain Where the Funds Are Coming From

Buying a property in Gibraltar can be an exciting milestone, but it also involves a number of regulatory checks that buyers should be prepared for from the outset.

One of the questions your estate agent may ask is:

“What is the source of your purchase funds?”

For some buyers, this may feel intrusive or unexpected. In reality, it is a normal part of Gibraltar’s regulated property process and forms part of the Anti-Money Laundering requirements that apply to real estate transactions.

Why Does Your Estate Agent Ask About Source of Funds?

The Office of Fair Trading (OFT) supervises Gibraltar real estate and letting agents for Anti-Money Laundering, Countering the Financing of Terrorism and Counter-Proliferation Financing purposes.

As part of these obligations, estate agents are required to carry out appropriate Customer Due Diligence (CDD) and assess the risks associated with the people and transactions they are dealing with.

That means your agent may need to understand not only who you are, but also where the money being used to purchase the property is coming from.

This is commonly referred to as your source of funds.

What Does “Source of Funds” Mean?

Source of funds refers to the origin of the money being used for the specific transaction.

For example, your purchase funds might come from:

• personal savings;
• the sale of another property;
• investment proceeds;
• an inheritance;
• a documented gift;
• business income;
• a mortgage; or
• a combination of different funding sources.

The purpose is not simply to identify which bank account the money is being transferred from. Your agent may need to understand how those funds were accumulated or obtained and whether the explanation is supported by appropriate documentation.

What Documents Might You Be Asked to Provide?

The documents required will depend on your individual circumstances and the structure of the transaction.

For example:

Personal savings may be supported by bank statements showing the accumulation of funds.

Property sale proceeds may be supported by a completion statement, sale contract, solicitor documentation or bank evidence showing receipt of the proceeds.

Inheritance may require probate, estate or solicitor documentation.

Gifts may require evidence identifying the person providing the funds, together with appropriate supporting information about the gift and the donor.

Investment proceeds may require statements or documentation showing the sale or redemption of the investment.

Mortgage finance may be supported by a mortgage agreement or formal offer from the lender.

Business income may require additional evidence depending on the source and circumstances.

This is not an exhaustive list. The information required will vary according to the transaction and the risk assessment carried out by the estate agent.

Source of Funds and Source of Wealth Are Not Always the Same

Although the terms are sometimes used together, source of funds and source of wealth refer to different things.

Source of funds focuses on the money being used for the particular property purchase.

Source of wealth looks more broadly at how a person accumulated their overall wealth.

For many straightforward transactions, the source of funds may be the main focus. In other cases, particularly where the transaction is higher risk or more complex, additional information about source of wealth may also be requested.

Does an AML Request Mean There Is a Problem?

No.

Being asked for identification, bank statements or supporting evidence does not mean that your estate agent suspects you of wrongdoing.

These checks form part of the regulatory responsibilities placed on real estate professionals.

Estate agents must understand the parties involved in relevant transactions and, where required, verify the source of the money being used.

The same process applies across many legitimate property transactions.

Preparing Early Can Help Your Purchase Run More Smoothly

One of the easiest ways to avoid unnecessary delays is to think about your funding documentation before you reach the later stages of the purchase.

If you know that your deposit or purchase funds come from several different sources, gathering the supporting documents early can make the process much easier.

For example, if your purchase involves a combination of savings, a mortgage and proceeds from the sale of another property, it may be helpful to have evidence relating to all three available from the outset.

Where another person is contributing to the purchase, additional information may also be required to understand their role and the funding arrangement.

The key is to provide a clear and consistent explanation supported by appropriate documentation.

How Find a Property Can Help

At Find a Property, we aim to make the property-buying process as clear as possible.

We will explain what information is required, why it is being requested and, where possible, what supporting documents may be needed so that you can prepare early.

If you are considering buying property in Gibraltar, speaking to us about your proposed funding arrangements at the beginning of the process can help reduce last-minute document requests and keep your transaction moving.

 

Find a Property
Professional Property Service with Personal Touch.

🌐 www.findaproperty.gi
☎ +350 200 44537
📍 83 Governor’s Street

 

This article is provided for general information only and does not constitute legal, financial or regulatory advice. Anti-Money Laundering and Customer Due Diligence requirements depend on the transaction, risk assessment and individual circumstances. Additional documentation may be requested where appropriate.