Source of Funds Explanation

Source of Funds Explanation

For Know Your Customer (KYC) and Anti Money Laundering (AML) we are required to gather Source of Funds information. Often confused with Source of Wealth, Source of Funds are actually an explanation of the funds which are used to setup a company and maintain the company. This means that it can be part of the source of wealth from one of the founders, but it can also from external investments or ongoing income of the business.

Common Source of Funds

The most common Source of Funds examples include:
  1. Savings
  2. Salary / Income
  3. Cash Bonuses and company dividends
  4. Proceeds from betting and/or lotteries

Documents

The more information that is given, the more streamlined the onboarding generally goes. Providing documents does generally help with this to provide additional proof. If no documents are provided there is a chance that registry will come back with a request for additional information. This will cause delays in the incorporation process.

Documents that can be provided to be able to show the source of funds are as follows:
  1. Financial Documents - Complete tax returns and audited financial statements
  2. Business Documents - Proof of Ownership, company registration documents, , website addresses, any records showing the sale of a business, and valuation of a business
  3. Investments - Proof of investment/securities accounts over the past three years, bank statements, and stock certificates
  4. Employment - Contracts and reference letters proving employment
  5. Gift - Documentary proof that funds were received as a gift from a friend, family member, or other entity
  6. Loan - Proof that funds obtained from a loan at a financial institution, individual, or other sources
  7. Inheritance - Documents such as a Grant of Probate or a Will
  8. Real Estate - Documents on property mortgage, real estate purchase/sale, valuation of owned real estate, lease documents on property producing lease income
  9. Other Source - Documentation on divorce, inheritance, lawsuits, etc.

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