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I was reading a question and answers about a classical scam. The modus operandi is clear.

It made me wonder about the legality of receiving money out of nowhere on my account. How legal is that? (in Europe France, if this matters).

Do I have to be able to explain why some money was transferred to my account? I would pay all the relevant taxes but it could very well be a generous donation from someone in the Caimans or Germany (these examples would cover opaque and legal sources of money transfer).

What is the threshold between "this money looks like money-laundering" and "this money looks like a generous donation"? In particular: is it up to me to explain where the money comes from, or is it the sender's problem? (in other words, when getting a wire transfer from a German bank, can I assume that proving the legality of this money is on German's side?)

CLARIFICATION: Following comments and answers, I would like to clarify that my question is specifically about the legality of receiving money

  • one does not know the source of,
  • which is unclaimed (= gift/donation),
  • anonymous
  • and not a transfer mistake
  • (and paying all relevant taxes).

If it is not legal, what should the receiver do? (I do not see a way to "reject" a transfer, once it is on my account I can only stare at it)

  • Where you are matters more than just "in Europe". Different countries have different laws. What country's laws apply to you? – Mike Scott Mar 10 '17 at 10:54
  • @MikeScott: France. I clarified that in my question. I as expecting some international laws to prevail. – WoJ Mar 10 '17 at 11:17
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It is not legal to receive large amounts of money that you cannot explain. If you receive more than 10,000€ (or even with smaller amounts regularly) there may be an investigation for money laundering or other tax evasion schemes.

If you have a reasonable explanation backed with records of where the money came from, there shouldn't be any problem to explain the money and pay taxes appropriately, but in the case of an anonymous gift, there is no reason for authorities to believe that it was a gift. Your best option if you do receive such an anonymous gift is to report it and allow authorities to investigate its source.

  • How do you explain or establish the anonymous gift is not money laundering? – Dheer Mar 10 '17 at 14:32
  • @Dheer You can't. You tell the authorities that you received an anonymous gift and let them investigate it. – Nathan L Mar 10 '17 at 14:52
  • So if I convert the question to physical. Someone gives me a bag full of Euro. I just pay taxes and don't report to police. .... I am not talking about Santa during Christmas who give cash 20, or 100 USD or gifts to poor. – Dheer Mar 10 '17 at 15:57
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    @Dheer I would certainly not attempt to spend a bag of what might be counterfeit cash. The answer doesn't change because the money is physical. One should be skeptical of any stranger who is giving away cash. – Nathan L Mar 10 '17 at 16:03
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Not sure about specific French laws. Assuming its not a political party receiving such donations, and it an normal individual ... General common sense answer would be;

but it could very well be a generous donation from someone in the Caimans or Germany

The onus would be on you to prove it is a generous donation.

What is the threshold between "this money looks like money-laundering" and "this money looks like a generous donation"?

There is no threshold. By default if you don't know the source; it is money-laundering.

In particular: is it up to me to explain where the money comes from, or is it the sender's problem?

You have to explain the source of money.

That the Bank in Germany may have to do its own due-diligence is separate from your having to explain the source of funds.

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It depends a lot on the specific country and its laws, but generally the receiver needs to be able to proof on request that

  • the money has no illegal sources, and
  • any income was taxed accordingly (which may have time until the following year)

Not every payment you get is taxable income; if you owned it before, that is typically easy to verify.
Note that gifts (donations are gifts) are taxable income in most countries once they are above a certain limit.

In practice, law and tax authorities seldom look at that if there is no other reason to check you out, or if the amounts are not several millions at least.

  • Thank you. Tracfin in France (in charge of anti money-laundering operations, among others) will be informed of any transfer > 10,000€. I was specifically wondering whether I have to explain where the money comes form (and, as I think about that - what to do when I genuinely cannot explain: poof 1M€ just dropped on my account and I do not know why and from whom (beside the information on the transfer)) – WoJ Mar 10 '17 at 12:01
  • @WoJ , either it's a taxable gift, or an accidential transfer; if you keep the latter it is theft, so you have to contact the bank and tell them about the accidential transfer. That's what the law says; not everybody would do that... – Aganju Mar 10 '17 at 12:04
  • Yes, I understand that (and mentioned that I would gladly pay the taxes). It is the mere fact of having a substantial sum popping up on my account, anonymous and unclaimed (so gift and not mistake), which I need or not to explain the source which made me wonder. – WoJ Mar 10 '17 at 12:13

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