Proof of Funds - more information
Proof of Funds (PoF) are used for a variety of reasons, most commonly to assist with real estate deals. It is important to note that although the funds are reserved in favor of you or your company for an agreed period, they cannot be withdrawn by you. And, while Financial Guarantee Corporation has been informed that this is acceptable in real estate transactions, we make no warranty as to the acceptability or otherwise of PoF for this purpose. It is incumbent on you to confirm this. We are not real estate agents. We can overcome the issue of the history of the funds, when and if it arises.
We do not provide PoF to persons seeking to enter Private Placement Programs. Please note that we do not run Private Placement Programs, High Yield Investment Programs or engage in any form of trading in securities.
Once you have confirmed the suitability of PoF for your needs, reviewed all the documentation (Procedure for Proof of Funds, the Principal Agreement and the Escrow Agreement) and have shown evidence of capacity to pay the Arrangement Fee we move to the next step.
The Principal Agreement and Escrow Agreement are signed and the Arrangement Fee is deposited into our Solicitor’s Trust Fund (also known as an Attorney’s Escrow Account). See Escrow Account for more details about this structure - put in place to protect both you and Financial Guarantee Corporation in respect of the Arrangement Fee.
Financial Guarantee Corporation then arranges a sub-account in your name or your company’s name at our bank. We then deposit the required amount of funds into that sub-account. We remain the sole signatories on the account.
Financial Guarantee Corporation then arrange for our bank to issue to your bank a “Proof of Funds/Bank Advice". This provides you with a bank statement in your name or your company’s name for the amount you require. This “Proof of Funds/Bank Advice" is only ever given ‘bank to bank' These funds are then held for your exclusive benefit in the sub-account for a period of time, as agreed. This is sometimes referred to (erroneously) as "blocked funds". Only then is the Arrangement Fee held in the Attorney Escrow Account paid to Financial Guarantee Corporation.
This Arrangement Fee includes the holding cost of the funds and the cost of establishing the above account structure. More information on fees. The Arrangement Fee for amounts greater than US$10M is negotiable. No fees other than the Arrangement Fee are charged.
Occasionally we have enquiries for Proof of Funds to be available for extended periods. If you need funds to be deposited for one year we can accommodate this, generally at a reduced fee.
The Arrangement Fee for PoF is generally 2.5% per month. This is to be paid on a monthly basis. If PoF are needed for a twelve month period, then this Arrangement Fee can be reduced provided the contracted term, and the payment thereof, is secured.
There is considerable work and expense to establish the sub account, transfer the funds into that account and then have the “Proof of Funds/Bank Advice" issued. Our biggest hurdle is covering our set up costs. For extended periods, we may consider charging the 2.5% for the first month and then agree on a reduced percentage for the remaining months.
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