When parents are helping their children buy property, what checks are needed?
CDD is required on the buyer named on the contract (the child); parents providing funds typically become subject to CDD as well because they are the source of funds.
The buyer is the party named on the contract - the child, in this scenario. CDD must be performed on the buyer.
Where the parents come in. If the parents are providing the funds (gift, loan, or co-purchase), they typically become subject to CDD too, because:
- For a gift - the parents' funds are the source of funds for the transaction. Verifying source of funds means verifying who the funds came from and that they're legitimate. This generally requires identity verification of the parents and documentation showing the funds are legitimately theirs.
- For a loan - same source-of-funds analysis as for a gift, plus any loan documentation that establishes the parents' financial interest in the transaction.
- For a co-purchase (parents on title) - the parents are buyers in their own right and need full CDD as buyers.
In all three cases the parents end up as additional parties to the AML file. easyAML allows multiple parties to be added to a single transaction and runs the appropriate checks on each.
The key principle: AML/CTF looks at who provides funds and who benefits, not just who's named on the contract. Anyone supplying the money for a transaction is part of the AML picture.
For the customer-facing summary, see HubSpot KB: https://knowledge.easyaml.com/common-customer-due-diligence-questions