Source of Funds and Source of Wealth for solicitors

Source of Funds is the origin of the money used in the specific transaction or matter. It might come from savings, salary, sale proceeds, borrowing, inheritance or a gift. Source of Wealth is the origin of a client's wider body of wealth, such as a business, career earnings, investments or inherited assets.

A bank statement can show where money was held or transferred, but it may not explain how it was acquired. Start with the client's explanation, then use evidence to test whether that explanation is credible and consistent with the matter.

Tell the client what needs explaining and why. A vague request for six months of statements often creates more work without answering the risk question. Ask for evidence that fits the source, amount, timing and client profile.

The check should be risk based. Straightforward accumulated savings may need a different level of evidence from a recent inheritance, an overseas asset sale or a complex company distribution. Record why the evidence obtained is enough for this file.

A third party can introduce a separate identity, relationship and funds trail. Record who is providing the money, who will receive the benefit and why the payment is being made. Do not treat an email address in a client's declaration as a completed donor check.

Once the firm decides to proceed, give the third party a focused request. They should receive only the checks and documents that apply to their role, with their evidence kept beside the main matter.

The file should show the client's explanation, the evidence considered, any gap or inconsistency and the reviewer's conclusion. If more information is needed, make a focused request and keep the reason for it.

A tidy summary is more useful than an unstructured folder of bank statements. Preserve the current evidence and material history, while following your firm's access and retention controls for sensitive financial documents.