Is source of wealth and source of funds the same? ‘Source of wealth’ describes how a customer or beneficial owner acquired their total wealth. ‘Source of funds’ refers to the origin of the funds. It refers to the activity that generated the funds, for example salary payments or sale proceeds, as well as the means through which the customer’s or beneficial owner’s funds were transferred.
How it works?
Banks need to validate the source of funds for: - All Customers - All identified Ultimate Beneficial Owners of: Customers with a Risk Rating of medium and high Risk
Customers categorised as Specially Designated National
Customers where a Politically Exposed Person (PEP) has been identified as a beneficial owner, SDN designation or closely related or associated with.
Sample of acceptable means of Source of Wealth/funds are:
Proceeds from Initial public offering
Funding and investments
Equity from the business or entity owners.
Source of wealth / funds narrative is captured in the customer CDD profile, at the end of the screening process.
By Harish Krovvidi
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