Source of funds
Source of funds refers to the origin of the specific money or assets used in a particular transaction or to fund a business relationship — for example, the proceeds of a property sale, a business loan, or salary income. Establishing source of funds is a key EDD step where a transaction is large, unusual, or involves a higher-risk client.
asking a client to explain and evidence where the money for a transaction came from is a standard EDD request. Plausible, documented evidence is required — verbal assurance alone is not sufficient.
Other terms that go with Source of funds
Source of wealth refers to the origin of a client's total net worth or assets — for example, built through a business, inheritance, investments, or professional career. Source of wealth is a broader concept than source of funds and is typically assessed for PEPs and other higher-risk clients as part of Enhanced Due Diligence.
Enhanced Due Diligence is a more thorough level of client verification required when a relationship presents a higher risk of money laundering or terrorist financing. EDD steps typically include verifying the source of funds, establishing source of wealth, obtaining senior management approval before onboarding, and applying more frequent ongoing monitoring.
Put Source of funds into practice with Certivus
Knowing the term is the first step. Certivus gives you the workflows — client intake, CDD, EDD, PEP and sanctions screening, audit-ready records — to apply it across every client.
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