A source of funds check assesses where the money for a specific transaction or account activity came from. It helps a regulated business determine whether the source is plausible, lawful and consistent with the customer profile.
What can the check examine?
- Funding account and account holder
- Salary or business income
- Sale proceeds
- Loan or investment proceeds
- Intercompany transfer
- Supporting transaction documents
Source of funds vs. source of wealth
Source of funds concerns the money used in a particular transaction. Source of wealth concerns how a person's or business's overall wealth was accumulated.
When may evidence be requested?
Requests can arise during onboarding, before a large or unusual transaction, or when monitoring identifies inconsistency. Requirements depend on risk and jurisdiction.
Which evidence may be useful?
Bank statements, invoices, contracts, payslips, sale agreements, loan documents or audited accounts may support the explanation. Evidence should connect the stated source to the actual funds.
How should data be handled?
Request only necessary information, use secure channels, restrict access and record the assessment and decision. A document should be validated rather than accepted solely because it exists.
