Source of Funds vs Source of Wealth: Evidence and Purpose

Identify the money and the question

For source of funds, name the amount, currency, expected transfer and underlying economic origin. A bank account identifies the immediate transfer route but may not explain how the customer obtained the money. Examples of relevant origins include earnings, sale proceeds or a distribution, subject to verification appropriate to the case.

For source of wealth, describe the broader accumulation over time, such as employment, business ownership, inheritance or asset sales. FATF's PEP guidance explicitly distinguishes these concepts. Its enhanced-measure discussion has a particular scope; it should not be converted into a claim that every customer everywhere must provide the same documents.

Build a coherent evidence chain

Connect the stated origin to supporting records and then to the funds involved. Depending on the approved process, a sale explanation may need evidence of the asset, entitlement to proceeds and receipt. Each item should answer a gap rather than merely increase the file count. Keep amounts, dates, parties and currencies visible for comparison.

Assess inconsistencies before reaching a conclusion. A document can be authentic yet irrelevant to the money under review. A recent account balance may show availability but not origin. Record what each source supports, its limitations and the reason any additional evidence is necessary. Avoid collecting unrelated sensitive information simply because it is obtainable.

Keep the decision proportionate and traceable

Use the applicable policy to determine when a funds or wealth assessment is required and who may accept the explanation. Record the intended relationship and any material changes in activity. FATF's customer-due-diligence framework connects ongoing review with knowledge of the customer and, where necessary, funding context; implementation depends on the relevant legal framework.

A reviewer may reach different conclusions for the two questions. Particular funds may be well supported while the broader wealth explanation remains incomplete, or the reverse. Preserve those outcomes separately and state the resulting next action. Do not call an account approved merely because a statement was uploaded or a transfer arrived from a bank.

Example: property proceeds within a broader wealth history

A fictional applicant intends to transfer $40,000 from $90,000 received after a property sale. The source-of-funds review connects the sale, the applicant's entitlement to the proceeds, receipt and proposed transfer. The source-of-wealth review asks how the property and other assets were accumulated over time. A sale document may support the recent proceeds without answering the earlier acquisition history. These examples identify questions, not mandatory document requirements.