How far back does a KYC audit go?

[Hegemon]

Say you had an apartment for 10 years and you sell it.
Will the bank ask you where you got the money to pay it? If so, with details?
What about 5 years back?

My question is there must be a point at which the expectation of the client having their documentation available to prove it must dissapear.
Say you made the money 10 years ago with a broker that no longer is in business, you can't prove it. Does that mean that the apartment can't be sold and the money sent to a bank?

How does this work?

 

[Sols]

There is no limit. It's entirely up to the bank's discretion, which is based on how risky they deem you to be, which is based on lots of other factors.

Unless you trigger suspicion, I doubt they will care how you get money for an apartment 10 years ago. Five years? Maybe, they might ask how you could afford it. If your answer is sensible, they might not even ask for supporting documents.

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This is the probably the answer to your question.

 

[uplana]

I believe they are not going further then 5 years. In most countries you have no obligations to keep your documents longer then 5 years!

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[newNomad]

Can someone explain what is the "arm's lenght approach" about?

 

[onlymichaelwai]

newNomad said:
Can someone explain what is the "arm's lenght approach" about?
Click to expand...

An arm's length transaction refers to a business deal in which buyers and sellers act independently without one party influencing the other.
In an arm's length transaction is a [transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm's length transaction allows the market to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party. It also assures third parties that there is no collusion between the buyer and seller.

 

[troubled soul]

Hegemon said:
Say you had an apartment for 10 years and you sell it.
Will the bank ask you where you got the money to pay it? If so, with details?
What about 5 years back?

My question is there must be a point at which the expectation of the client having their documentation available to prove it must dissapear.
Say you made the money 10 years ago with a broker that no longer is in business, you can't prove it. Does that mean that the apartment can't be sold and the money sent to a bank?

How does this work?
Click to expand...

First of all which country Are you talking ?
Regarding this type of things different country different rules and regulation. Some banana republic you can deposit any amount of money in bank without any paperwork .
In UAE cash is king.

Overall,
If it is small amount nobody cares.
If it is big amount , You have to prove with hard evidence.
Make a Proper story.

 

[newNomad]

onlymichaelwai said:
An arm's length transaction refers to a business deal in which buyers and sellers act independently without one party influencing the other.
In an arm's length transaction is a [transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm's length transaction allows the market to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party. It also assures third parties that there is no collusion between the buyer and seller.
Click to expand...

Ah ok 🙂 since I was assuming this to be a term used within bank AML/Complaince where the documentation is asked only to "arm's lenght" i.e. when providing source of funds you state it's from real estate sale and provide a contract of sale and perhaps a slip where the buyer paid the amount. How the buyer got that money to buy from you or how did you bought the house in the first place to be able to sell it later is out of "arm's lenght" and thus irrelevant for the compliance - this seems to be a common praxis

 

[newNomad]

azb1 said:
Make a Proper story.
Click to expand...

..or you mean make up a proper story? 😀

 

[yeti]

azb1 said:
First of all which country Are you talking ?
Regarding this type of things different country different rules and regulation. Some banana republic you can deposit any amount of money in bank without any paperwork .
In UAE cash is king.

Overall,
If it is small amount nobody cares.
If it is big amount , You have to prove with hard evidence.
Make a Proper story.
Click to expand...

What is the small/big amount in cash for UAE?