Source of Funds refers to the verification process used to determine the origin of money used in financial transactions. This documentation is crucial for anti-money laundering (AML) compliance and fraud prevention.
Key Components
- Income verification
- Asset documentation
- Transaction history
- Bank statements
- Legal declarations
Verification Methods
- Document review
- Bank confirmation
- Income validation
- Asset tracking
- Transaction analysis
Required Documentation
- Salary statements
- Investment records
- Business income
- Sale proceeds
- Inheritance proof
Risk Indicators
- Unclear sources
- Multiple transfers
- Complex structures
- Offshore accounts
- Unusual patterns
Best Practices
- Thorough verification
- Regular updates
- Clear documentation
- Risk assessment
- Ongoing monitoring
Source of Funds verification is essential for maintaining financial integrity and preventing illicit money flows through legitimate channels.