When we decided to purchase an apartment here, we provided them with logs and details of how we got the money in the first place (selling an apartment), the transfer of crypto, records of selling it on an exchange.
It's not ideal but it's a requirement for AML when buying a house here. We were not given any difficulty, but we did provide more records and details than you'd typically be expected to if we had made a bank transfer.
Personally I think AML requirements are bullshit and don't prevent money laundering. But we don't have much of a choice but to comply with them when purchasing an apartment. Crypto thankfully didn't cause a problem for us here. It's possible some lawyers would be more nervous accepting proceeds that have been tainted by crypto though.
AML requirements are indeed nonsense. It's all governmental regulations with the intent to restrict money laundering, but the impacts are mainly felt by the regular folks. There are numerous instance of banks who flaunt AML requirements till they get caught and slap with a fine. And this are only the ones who get caught.
Perhaps you should have reach out to a mortgage broker as they will be able to help you navigate the process as they know what the banks are looking for. Hopefully now this hurdle is crossed, you both can finally sit down together and enjoy the view :)
okay, happy to hear that it worked out for you! But yes, in my country I think this would be a nightmare...