Buying a flat in Prague with cash: source-of-funds checks explained

A buyer who says "I am paying cash" in a Czech property deal usually means "I am not taking a mortgage". The money still travels by bank transfer, almost always through an escrow account, and a bank, a notary or a lawyer looks at it on the way. The look is not an accusation. It is a legal duty, and a buyer who understands it can prepare for it in a morning rather than lose a fortnight to it.

This explainer describes who asks, what they ask and what documents answer. It is not guidance on how to avoid the checks, which are a normal part of the market.

Who must ask

Czech law on measures against money laundering and terrorist financing (zákon č. 253/2008 Sb.) places duties on a list of "obliged persons". Banks are among them. So are notaries, lawyers and other professionals who handle client money or advise on property transactions, and in many cases real estate brokers. The Financial Analytical Office (Finanční analytický úřad, FAÚ) is the national financial intelligence unit: it receives reports of suspicious transactions, supervises compliance with the act and publishes guidance. Lawyers and notaries send their reports through their professional chambers rather than directly.

An obliged person must identify the client, check the identity against documents and ask about the purpose of the transaction and the origin of the funds when the risk calls for it. They can refuse to act if they cannot complete the checks. That refusal, not the question, is the practical risk for a buyer: a notary who cannot satisfy the requirements may decline to hold the money.

What counts as "cash"

There are two meanings, and the law treats them differently.

• Cash in the sense of own funds. The buyer pays from savings or from the proceeds of another asset, without a loan. This is the common case, and the price moves from the buyer's bank account to an escrow account and then to the seller's.
• Physical banknotes. The act on limiting cash payments (zákon č. 254/2004 Sb.) says any payment above CZK 270,000 must be made without cash, and payments between the same payer and recipient on one calendar day are added together (as of 2026; check Finanční správa, which enforces it). For a flat that rules out banknotes for practically the whole price, and splitting the sum over several days to stay under the limit is itself a breach. Fines for individuals run to hundreds of thousands of crowns.

A seller who proposes to receive part of the price in cash "outside the contract" is proposing something that puts both sides at legal risk, including tax and registration risk. A lawyer should hear about it at once.

What they ask for

The questions follow a pattern. Be ready to answer each in writing.

1. Who are you? Passport or identity card, address, and sometimes tax number.
2. Who is behind the buyer? If the buyer is a company, the beneficial owners (skuteční majitelé) must be identified. Our explainer on the beneficial ownership register describes it.
3. Where did the money come from? The source of the funds, in documents.
4. Why this purchase? Own use, investment or a gift, and whether you act on someone else's behalf.
5. Are you in a high-risk category? Politically exposed persons, and clients from high-risk jurisdictions, face closer review.

The transfer itself

The money should come from an account in the buyer's own name, where possible. A payment from a third party raises more questions, and may require a separate explanation and documents about the payer. Transfers from abroad are checked by the sending and receiving banks, and international transfers can take days, so allow for the time.

Our explainers on notaries, lawyers and escrow and on reservation agreements show where in the process the checks fall. Often the first question comes when you send the reservation deposit.

If the money comes from abroad

Foreign buyers meet two sets of checks, one on each side of the border. The foreign bank may ask for the purpose of a large transfer to Czechia, and the Czech bank, notary or lawyer asks for the source. Keep the documents together and consistent: the same names, the same amounts, the same dates. Documents may need a certified translation. Our guide to buying a flat from abroad describes the other formalities, and the Hypoteky.com guide to buying property as a foreigner gives an overview of the process.

Common mistakes

• Waiting until the day before closing to gather documents. Collect them when you reserve.
• Using several accounts without a trail. Move the money to one account in your own name early, and let it rest.
• Mixing personal and business funds.
• Relying on a verbal explanation. Documents are what the professional can keep on file.
• Treating a question as an insult. The people asking are doing what the law requires of them, and they would be sanctioned for not asking.

Privacy and data

The professional keeps a record of what you supplied, and may be obliged to report suspicious transactions to the FAÚ without telling you. They handle personal data under data-protection rules, and you may ask what is kept and for how long. Our explainer on data protection for small business covers the general framework.

Frequently asked questions

Frequently asked questions

Can I pay for a flat in physical cash?

No. Payments above CZK 270,000 a day between the same parties must go by transfer under zákon č. 254/2004 Sb. (as of 2026; check Finanční správa), and escrow agents accept transfers only.

What if my money came from a gift or an inheritance?

Bring the gift agreement or the estate decision, and evidence of the donor's source if asked. The professional decides what is enough.

Will the checks delay the purchase?

Only if the documents are missing. A buyer who submits a complete file at the reservation stage usually meets no delay.

Who sees my documents?

The notary, lawyer or bank holding the money, and in some cases the broker. They are bound by confidentiality and data-protection rules, and may have to report suspicions to the FAÚ.

Buying through a company or another vehicle

If the buyer is a company, the checks widen. The professional wants to know who owns and controls the company, which is the question of the beneficial owner, and why the company is buying. Expect to supply the company's registration documents, an extract from the commercial register or its foreign equivalent, the ownership structure and identification of the people behind it. A chain of holding companies in several countries takes longer to document than a single Czech s.r.o., and a structure that is hard to explain invites more questions, not fewer. Our guide to the Czech commercial register shows what public records exist on the Czech side.

A buyer who acts for someone else, for example a family member or a client, must say so. The professional then identifies the person for whom the purchase is made as well as the person who signs.

When the answers are not enough

If a notary, lawyer or bank cannot complete its checks, it may decline to act, delay the escrow or ask for further documents. In rare cases a professional that suspects money laundering must report to the Financial Analytical Office and may be barred from telling the client. For a buyer the practical consequence is timing: a purchase that cannot get an escrow agent cannot close.

This is why the order of steps matters. Before you pay a reservation deposit, make sure the reservation agreement ties the deposit to the successful completion of the legal checks and the escrow. Our explainer on reservation agreements and escrow describes the clauses. A deposit paid on the strength of an unchecked file is the money most at risk.

A short preparation list

If part of the price comes from a loan, the bank runs its own checks on the deposit; see how much deposit a Czech mortgage needs. Assemble these in a folder before you reserve: identity and address proof, six to twelve months of statements for the paying account, and the document that explains the biggest source of money. If you cannot explain a source in one page of documents, ask your lawyer how to handle it before you pay a deposit.

This is a general explainer, not legal, tax or mortgage advice.