A deposit draws extra attention when its size or timing does not match the rest of the applicant's financial pattern — a round, large sum appearing all at once in an account that otherwise shows modest, regular activity; cash deposited in person rather than transferred electronically; or funds arriving from a source, account, or country not previously connected to the applicant. None of these features prove anything improper on their own, but each is a prompt for a documented explanation rather than an assumption either way.
The common thread across every category in this module — inheritance, an asset sale, a business distribution, a cross-border transfer — is that the underlying story is very often completely legitimate. The problem is never usually the money itself; it is the absence of paperwork connecting the deposit to that legitimate story.
An inheritance is typically documented with the relevant estate paperwork — a will, a statement from the executor or the estate's lawyer, or a notice from the estate confirming the distribution amount and date — matched against the deposit itself. Proceeds from selling a vehicle, a boat, or other significant personal property are documented with a bill of sale showing the buyer, the price, and the date, ideally alongside proof the item was actually owned by the seller beforehand.
A business owner receiving a distribution or dividend from their own incorporated business needs documentation connecting the corporate funds to the personal deposit — a T5 slip, corporate resolution, or accountant's letter confirming the distribution, since a self-employed borrower moving money between a corporate and personal account is otherwise indistinguishable on a bank statement from an unexplained deposit of the same size. Course 03, Self-Employed & Incorporated Borrowers, covers this population's income documentation more broadly, and this particular deposit-sourcing scenario is a natural extension of that material.
Under Canada's anti-money-laundering framework, a reporting entity that receives $10,000 or more in cash in a single transaction is generally required to file a Large Cash Transaction Report with FINTRAC, and the same obligation applies where two or more cash amounts totalling $10,000 or more are received from the same person or on the same person's behalf within a consecutive 24-hour window. This is a federal reporting requirement aimed at the financial system broadly — banks, and typically the lawyer or notary handling closing funds, are the parties most directly positioned as reporting entities in a real estate transaction — but it is exactly why a broker should treat any cash-heavy down payment as needing extra care and extra documentation, and should generally steer clients toward bank drafts, wire transfers, or certified cheques rather than cash for any large down payment component.
This course only introduces the FINTRAC angle far enough to explain why large cash movements are treated differently — the full anti-money-laundering and client-identification framework mortgage professionals operate under is its own subject, covered properly in Course 23, Compliance: FINTRAC, PIPEDA & CASL.
As Module 01 established, an unsourced deposit does not typically mean an automatic decline — it usually means that specific amount is excluded from what counts toward the down payment. This can still be a serious problem if the excluded amount was large enough to push the effective down payment below the minimum tier from Module 02, or if it moves the loan-to-value into a different, less favourable insurance category from Course 01, but it is a structural problem to solve, not necessarily a fatal one.
The best outcome, by a wide margin, is avoiding this situation entirely by raising source-of-funds questions early, as Module 01 and Module 03 both emphasize. A broker who understands what a lender will ask about a large deposit — and who asks the client for that documentation the moment an unusual deposit is mentioned, rather than after it has already landed in the account — turns what could be a last-minute crisis into routine paperwork.
A self-employed client plans to move $40,000 from their corporation's account into their personal account to help fund a down payment. What should a broker advise before this happens?
A transfer from a corporate account to a personal account is exactly the kind of deposit that needs a documented paper trail connecting it to a legitimate distribution — without it, the deposit is indistinguishable from any other unexplained lump sum, regardless of who owns the company. Assuming no documentation is needed because it is the client's own business ignores this entirely. Corporate distributions are a legitimate, commonly used down payment source when properly documented, not a banned one. And the documentation requirement applies to electronic transfers just as much as cash — the funding method does not exempt the deposit from needing an explanation.
Lender policies change without notice. Confirm current guidelines directly with the lender or insurer before relying on them for a live file.
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