What Is a Source of Funds Request
Source of funds is a request from a bank or payment system requiring documentary proof of where the money involved in a transaction came from. This is part of AML procedures: financial institutions are required to confirm that funds were obtained legally.
The request can arrive before a payment is processed or afterwards — as a requirement to provide documents under threat of funds being frozen.
Why It Happens
Large transaction amount. Transfers exceeding $10,000 (or the equivalent in another currency) in many jurisdictions require mandatory reporting and source confirmation.
Atypical activity. If the amount significantly exceeds normal account activity, the bank is obliged to verify its origin.
International transfer to a risky jurisdiction. Payments to countries on FATF high-risk lists automatically require additional verification.
Enhanced Due Diligence (EDD). Clients classified as Politically Exposed Persons (PEPs) or their associates are subject to enhanced checks.
Periodic profile review. Banks regularly review client profiles and may request updated source of funds information.
What Documents to Provide
Depending on the source of funds:
Salary and employment income:
- Pay stubs or an employer letter confirming income
- Bank statements from a salary account for the past 3–6 months
- Employment contract
Asset sales (real estate, shares):
- Sale and purchase agreement
- Credit confirmation statement
- Documents confirming ownership of the asset
Business income:
- Company financial statements
- Tax returns
- Contracts with counterparties
Inheritance or gift:
- Notarised inheritance documents
- Deed of gift
Investment income:
- Brokerage statements
- Dividend payment confirmations
Typical Timelines
- Processing of provided documents: 3–10 business days
- Extended EDD review: up to 30 business days
- If the document package is incomplete: the timeline extends until all materials are received
FAQ
What happens if I don't respond to the request? The bank has the right to freeze the funds and decline the transaction. If there is systematic refusal to cooperate, the account may be closed and the matter reported to the regulator.
Do banks only request source of funds from wealthy clients? No. Any client may receive a request if their transaction looks atypical relative to their usual account activity. Even a comparatively small amount can raise questions if the account was rarely used before.
Can I refuse to provide documents and demand my money back? You can request a return of funds, but the bank is entitled to hold them for the duration required to complete the review. In some jurisdictions, frozen funds may be transferred to the regulator.
If a source of funds request is blocking your international payments, Marix can help you structure your transaction to meet all regulatory requirements.