What is Source of Funds?
The short answer
Source of funds concerns where the money used for a particular transaction or relationship comes from.
Source of Funds: why it matters
An onboarding or review decision can contain several different questions. Keeping this concept distinct helps the team assign the right evidence and decision owner, rather than rely on a single completed status.
How to assess it in practice
Identify the specific funds being assessed and obtain evidence that addresses their origin rather than substituting a general wealth statement. Start by defining the question the team needs to answer. Identify the relevant record or evidence, check its scope and date, and retain the reasoning behind the result. If evidence conflicts, keep that conflict visible for review.
Worked example
Illustrative workflow: a team reviewing a business adds a separate check for source of funds. The reviewer’s task is to identify the specific funds being assessed and obtain evidence that addresses their origin rather than substituting a general wealth statement. The outcome is recorded together with the supporting evidence; an unresolved question stays open rather than being converted into a positive result.
A customer supplies a bank statement showing a transfer from another account. The reviewer still needs the explanation and evidence for how those particular funds arose.
Distinctions that matter
Source of Funds belongs to the ongoing review & funding context topic family. Read Ongoing Due Diligence alongside it to understand the adjacent question. Each page has its own intended scope; shared context does not make the concepts equivalent.
Evidence and review output
Review these
- Previously approved baseline
- New facts and source dates
- Review outcome and next trigger
The review should produce
An updated relationship assessment with changes, unanswered questions and the next action made explicit.
Across this family
Compare the current understanding of a relationship with its approved baseline. A scheduled review and an event-driven review can answer different questions, so specify what triggers each and how outcomes update the file. A delivered notification is not itself a completed reassessment.
A note from practice
Source of funds concerns the money involved in a particular transaction or relationship. Trace that money to supporting evidence and distinguish the immediate transfer account from the underlying economic origin.
Limits and common mistakes
The practical boundary is important: Identify the specific funds being assessed and obtain evidence that addresses their origin rather than substituting a general wealth statement. Do not substitute a related label for this check or assume that missing information is a negative finding. Source-specific and jurisdiction-specific rules require their own review.
Frequently asked questions
Which evidence should I review?
How is Source of Funds different from Source of Wealth?
What should the result of the review contain?
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Related topics
- Ongoing review & funding contextOngoing Due DiligenceOngoing due diligence maintains an understanding of an existing relationship as customer information and activity change.
- Ongoing review & funding contextPeriodic ReviewPeriodic review reassesses a relationship on a defined schedule using relevant current information.
- Ongoing review & funding contextTrigger-Based ReviewTrigger-based review starts a reassessment when a defined event or change warrants attention.
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