Bank wants income,asset,wealth source info. Bank call back loan?IRD define as dealer?

[MelodyShi]

HI, Guys, many thanks if someone can advise me on this issue: I am on $1M loan with a bank for a rental property which I bought in 2018. Two week ago, the personal account manager discussed my financial situation on phone, and asked how is my income impacted by Covid-19. I said my salary dropped by 25%. ( I am in the immigration and overseas student agency industry).

Last week, this bank requested me to fill in two questionnaires. The cover letter says it is because bank doesn’t have my sufficient dated financial information, also for anti-laundry-money purpose. One questionnaire asks for details of my income, assets and source of wealth and relevant evidence documents, e.g. if I claim I am still on salary, then need to provide IRD documents or pay slips, also asks had I ever sold other properties and details, do I currently hold other properties, shares etc.

Another questionnaire asks about “account use”. E.g. How often and how much do I expect deposit and cash put into my account, do I intend to receive or pay international payment, do I intend to use my account for other things than my personal use. ect.

My questions are: 1) Why does this bank request me this information? Does the bank want to “call back” my loan after assessing my finance (either to pay back a big sum of loan or pay off in advance)?

2) If this bank would “call back” loan and I cannot afford it, will the bank enforce a mortgage sale? This property already passed its 3 years bright line test and it seems no need to pay tax if I sell now. However, I am not sure how IRD will regard my pattern. Last year in Covid-19, I could not find tenants for long time because of lock down, I sold other 2 rental properties which I was holding for 3 years (both make profit, but one passes bright line test , no need to pay tax. Another one paid tax). Also I bought and sold another rental property in 2016 after holding 2 and half years, will IRD think my pattern to define me as a dealer(trader)?

3) If IRD would define me as the dealer(trader) for selling this property recently, but considering it is the bank would enforce me to sell to pay “call back” loan, will IRD waive the definition for me as dealer(trader) for this property sale, so no tax to pay?

4) Due to my family’ health situation, in next 5 months, I will have to sell my home house which I was holding and living for 13 years, will IRD charge me tax for this one if IRD would define me as a dealer due to sell this above-mentioned rental property? Thank you!

[donna]

Wow - you've got a lot going on.

Get professional advice. i.e. property accountant, and a mortgage broker etc.

iLender for mortgage-related info is on PropertyTalk and he will likely reply here - plus you can private message him.

Gilligan Rowe Assoc. (gra.co.nz) for your property related bright-line test, tax owing etc. or another property accountant.

Your house is not subject to tax - as it's your home.


cheers,

Donna

[MelodyShi]

Wow - you've got a lot going on.

Get professional advice. i.e. property accountant, and a mortgage broker etc.

iLender for mortgage-related info is on PropertyTalk and he will likely reply here - plus you can private message him.

Gilligan Rowe Assoc. (gra.co.nz) for your property related bright-line test, tax owing etc. or another property accountant.

Your house is not subject to tax - as it's your home.


cheers,

Donna

Donna, thank you very much！

[Sanya]

Banks have AML and KYC requirements to adhere to which can include the need for them to contact you periodically and keep up to date identification information on you.

Transactionally, Banks typically leave you alone but in your case it looks like a “trigger event” has occurred and judging by how invasive the information request is – it appears your risk profile has been elevated and you are now subject to something the banks call Enhanced customer Due Diligence (EDD).

Trigger events typically include (but are not limited to) any of the following:

Repeated buying and selling of high valued goods
Transactions that are not ordinary for you
Cash transactions or related series of cash transactions that exceed NZD 10,000
Someone you are connected to financially is under suspicion of money laundering.

You haven’t mentioned it but EDD actions typically also want to explore whether you are a tax resident in any other jurisdictions.

The focus of the bank appears to be AML and KYC – not a loan call. As long as you have an good loan payment history and can demonstrate you have sufficient legitimate income to continue servicing your loan(s) there is no threat of a loan call IMHO.

[brokerman]

Thanks Donna

I agree with Sanya in regard to the bank, they are under huge pressure with new regulations around know your customer, CCCFA changes and 'trigger' events as above.

I'd play it cautions and not provide any information that is not asked for, if your loan history is all good then no drama. If it turns into a drama then look at changing lenders.

The other stuff is as Donna says GRA a great source

Good luck and happy to help privately if you need it

[Hound]

Another method I've heard used in the past. (Not that I'd recommend it) Is to provide absolutely screeds of information. Blind them with vast amounts of well presented reports. Nobody wants to appear stupid!

[Beano]

HI, Guys, many thanks if someone can advise me on this issue: I am on $1M loan with a bank for a rental property which I bought in 2018. Two week ago, the personal account manager discussed my financial situation on phone, and asked how is my income impacted by Covid-19. I said my salary dropped by 25%. ( I am in the immigration and overseas student agency industry).

Last week, this bank requested me to fill in two questionnaires. The cover letter says it is because bank doesn’t have my sufficient dated financial information, also for anti-laundry-money purpose. One questionnaire asks for details of my income, assets and source of wealth and relevant evidence documents, e.g. if I claim I am still on salary, then need to provide IRD documents or pay slips, also asks had I ever sold other properties and details, do I currently hold other properties, shares etc.

Another questionnaire asks about “account use”. E.g. How often and how much do I expect deposit and cash put into my account, do I intend to receive or pay international payment, do I intend to use my account for other things than my personal use. etc These requests don't seem to be unusual .
On the loans documents they have a 15% tenants do not renew / drop income clauses where loans are reviewed.
All the above are not majors and should not take more than a few minutes to complete.
The AML and the above I would have completed about a dozen times already to different organisations.
I Would not blink getting a request like that.
PS did the bank come back to you ?

[BlueSky]

Banks have AML and KYC requirements to adhere to which can include the need for them to contact you periodically and keep up to date identification information on you.

Transactionally, Banks typically leave you alone but in your case it looks like a “trigger event” has occurred and judging by how invasive the information request is – it appears your risk profile has been elevated and you are now subject to something the banks call Enhanced customer Due Diligence (EDD)

Someone I know had a recent experience which according to him was very frustrating. He has a good record and history with existing bank . He transferred a large amount of money into another bank on a Notice saver account to get a better return and park it there on a short term.

Six months later, they are no asking for source of funds. He provided all the statements from the other bank where the funds originated from.
Now they are wanting source of wealth. When questioned about the latter, he was very vague.
Is there a requirement from the new bank to be provided the details the original source when the funds came from another mainstream bank which satisficed all regulatory checks?

[brokerman]

BlueSky, this is pure AML, looks like some-one didn't do their job properly and it got picked up on audit. Banks face severe fines for breaches.

[BlueSky]

BlueSky, this is pure AML, looks like some-one didn't do their job properly and it got picked up on audit. Banks face severe fines for breaches.

So does he say F off or provide the docs again. The previous bank has all the details so why does this bank care if it was transferred directly.

[brokerman]

So does he say F off or provide the docs again. The previous bank has all the details so why does this bank care if it was transferred directly.

I know what I would like to say.................the new bank has to have a clear trail, it's up to them to decide whether or not they have it.

AML and new CCCFA rules causing havoc.

[Beano]

So does he say F off or provide the docs again. The previous bank has all the details so why does this bank care if it was transferred directly.

Just need to show your Source and Disposition Statement .
I assume he does one for his bank every year .

[BlueSky]

Just need to show your Source and Disposition Statement .
I assume he does one for his bank every year .

I asked him, he has provided statement which shows the funds and then transfer date to this bank. But they want to know where the original money came from.
They said it doesn’t actually detail the original source, or provide them with any kind of transparency on what that original source is, since the statement reflects the funds having already been in the account
That sort of detail will require going back a decade. particularly if you accumulated them from savings , wages, investments , business etc.
Think one bank was recently warned hence they are now going overboard with regulatory details.

[Beano]

I asked him, he has provided statement which shows the funds and then transfer date to this bank. But they want to know where the original money came from.
They said it doesn’t actually detail the original source, or provide them with any kind of transparency on what that original source is, since the statement reflects the funds having already been in the account
That sort of detail will require going back a decade. particularly if you accumulated them from savings , wages, investments , business etc.
Think one bank was recently warned hence they are now going overboard with regulatory details.

I have done this several times this year for real-estate agents under the AML.
In addition to the Source and Disposition of funds and the income statements I also provide the filed IR4 and tax reconciliation ,copies of the bank statements showing which company the rentals come from . These I normally go back 4 years.
They seem to be happy with this and it's only a few minutes to do.
Only once have I had to have the documents notarise (probably because I was overseas).
that's the world we live in now!

[MelodyShi]

HI, Guys, many thanks if someone can advise me on this issue: I am on $1M loan with a bank for a rental property which I bought in 2018. Two week ago, the personal account manager discussed my financial situation on phone, and asked how is my income impacted by Covid-19. I said my salary dropped by 25%. ( I am in the immigration and overseas student agency industry).

Last week, this bank requested me to fill in two questionnaires. The cover letter says it is because bank doesn’t have my sufficient dated financial information, also for anti-laundry-money purpose. One questionnaire asks for details of my income, assets and source of wealth and relevant evidence documents, e.g. if I claim I am still on salary, then need to provide IRD documents or pay slips, also asks had I ever sold other properties and details, do I currently hold other properties, shares etc.

Another questionnaire asks about “account use”. E.g. How often and how much do I expect deposit and cash put into my account, do I intend to receive or pay international payment, do I intend to use my account for other things than my personal use. etc These requests don't seem to be unusual .
On the loans documents they have a 15% tenants do not renew / drop income clauses where loans are reviewed.
All the above are not majors and should not take more than a few minutes to complete.
The AML and the above I would have completed about a dozen times already to different organisations.
I Would not blink getting a request like that.
PS did the bank come back to you ?

Yes, yesterday the bank texted my mobile to remind me to fill in the forms and send back.