Source of funds: what the bank will ask for before you buy in Spain.

What the law requires

Law 10/2010 places a list of professionals, known as obliged entities, under customer due diligence duties before they take part in a transaction. They must identify you from a reliable document (article 3) and establish the beneficial owner, meaning the actual person behind the purchase: if you buy through a company, whoever owns more than 25% or controls it (article 4).

They must also understand the purpose of the transaction and what you do for a living, and check that it holds up (article 5), and keep watch that your transactions match what they know about you, including the source of the funds (article 6). How far they go depends on the risk they see: a large purchase paid from abroad usually draws more questions than a mortgage on a family home.

Where the client is a politically exposed person, or a relative or close associate of one, the law expressly calls for steps to establish the source of their wealth and of the funds (article 14).

Who will ask

In a Spanish property purchase almost everyone involved is an obliged entity: your bank and the seller’s, the notary, the land registrar, the developer and the estate agent. So are the lawyers and advisers working on the deal. Each runs its own checks, so the practical answer is to prepare one file and give everyone the same.

Being asked does not mean anyone suspects you. If they skip the checks they are the ones who get fined, and the law forbids them to go ahead when the checks cannot be completed.

Which documents, depending on where the money comes from

• Sale of another property: the sale deed and the bank statement showing the proceeds coming in.
• Inheritance or gift: the probate or estate distribution documents, or the deed of gift, with proof that any tax due was paid.
• Savings from work: payslips or invoices, your tax returns for recent years and statements showing the savings building up.
• Your own company: the resolution declaring the dividend, the annual accounts and proof of tax paid on the distribution.
• Investments: the broker’s or fund manager’s statement showing the shares or funds sold and the money paid into your account.
• A loan: the loan agreement and the statement showing the drawdown.
• Cryptoassets: the full exchange history, from purchase to conversion into euros or pounds, and the bank account that received the proceeds.

Official documents from another country usually need an apostille, and anything not in Spanish or English is often asked for in translation.

If the money comes from outside Spain

Send it from an account in your own name in the country where you earned it or where you live, ideally in one or a few transfers. What triggers questions is the opposite: payments from third parties, accounts in countries you have no link with, or one sum broken into many small transfers.

If you change currency, use a bank or an authorised payment firm and keep the confirmations. If a relative is giving you the money, put the gift in writing first and have the transfer come from the giver’s own account.

Cash

If you carry 10,000 euros or more in notes and coins into or out of Spain, you must declare it beforehand (article 34 of Law 10/2010). As for paying in cash, Law 7/2012 bans cash payments of 1,000 euros or more where one party is a business or professional, such as a developer; if the payer is an individual without a tax address in Spain, the limit rises to 10,000 euros.

Between private individuals that law sets no ceiling, but a cash payment is recorded in the deed and is the hardest thing to explain afterwards. Pay by bank transfer or banker’s draft.

At the notary’s

The notary records the means of payment in the deed: whether the price was paid before or at signing, how much, and whether by transfer, cheque or cash (article 24 of the Notaries Act). Bring proof of every payment, including the deposit paid under the arras contract. If someone refuses to say how they paid, the notary notes it and the Land Registry will not register the purchase until it is put right (article 254.3 of the Mortgage Act).

What happens if the source cannot be shown

The bank can ask for more documents and hold the transfer in the meantime. If it cannot complete its due diligence, the law requires it not to carry out the transaction (article 7.3). And if, after looking into it, it sees signs of money laundering, it must report to SEPBLAC, Spain’s financial intelligence unit, without telling you (articles 18 and 24).

In practice completion is put off or never happens, sometimes with the deposit already paid and the arras deadline running. That is why the file should be ready before you reserve the property.

How we help

• We assemble your source of funds file before the bank or the notary requests it.
• We lay out the money’s route account by account so it reads clearly first time.
• We tell you which documents from your country need an apostille or translation.
• We deal with the bank and the notary when they ask for clarification.
• If we are handling your purchase, the file is part of the work.

This guide is general information. Before making a decision about your own case, speak to a lawyer.