Understanding Source of Wealth and Source of Funds Requirements

Why Are These Checks Required?

Financial institutions across the European Union and globally are legally required to "know their customers" (often abbreviated as KYC). This is not just about verifying your identity with a passport or selfie but also involves understanding the nature of your financial activities. These measures are designed to prevent the financial system from being used for illegal activities such as money laundering, fraud, or tax evasion.

When we request information about your funds, it is not an invasion of privacy but a mandatory step to ensure that the assets being handled are legitimate. By cooperating with these requests, you help us maintain a secure ecosystem for everyone. You can learn more about the regulatory frameworks we operate under in our recent guide on financial licenses.

The Difference Between Source of Wealth and Source of Funds

It is common to confuse Source of Wealth with Source of Funds, yet in compliance terms, they answer different questions.

Source of Funds refers to the origin of the specific money involved in a particular transaction or business relationship. It focuses on the "now." For example, if you are transferring 50,000 EUR to your Bankera account, the Source of Funds inquiry asks where that specific money came from. Was it a salary payment, the sale of a property, a loan, or perhaps a dividend payout? The goal is to verify that the specific funds moving through the account are not derived from illicit activity.

Source of Wealth, on the other hand, is broader. It refers to the origin of your total accumulated assets and net worth over time. It looks at the "history" of your financial life. This inquiry seeks to understand how you have acquired your overall wealth. For instance, have you built your wealth through years of employment, inheritance, early investments in crypto, or owning a business? The Source of Wealth does not look at a single transfer but rather paints a picture of your economic activities to ensure they align with the volume of funds you intend to transact.

Documentation You May Need to Provide

To satisfy these requirements, we may ask you to provide supporting documents. The specific documents required depend on the nature of your income, but providing clear and complete evidence significantly speeds up the review process. You can find a non-exhaustive list of document examples here.

For salary or employment income, we typically require recent payslips (usually from the last three months) or a bank statement showing the salary credits. A tax return or an official letter from your employer confirming your position and salary is also acceptable.

If your funds come from savings, simply showing a current balance is often not enough. We need to see how those savings were accumulated. This could be a series of bank statements showing regular deposits from salary or other income sources over a period of time.

For income derived from the sale of property or assets, a copy of the sale agreement or the deed of sale is standard. We would also look for a bank statement that shows the proceeds entering your account. Similarly, if the funds are from an inheritance, a grant of probate, a copy of the will, or a letter from the executor detailing the amount you received would be required.

For our business clients or those with investment income, we might request audited company accounts, dividend vouchers, or investment certificates. If you are a crypto investor, transaction histories from exchanges showing the purchase and sale of assets can serve as valid proof.

Tips for a Smooth Verification Process

To avoid delays, ensure that every document you upload is high-quality and readable. Nothing slows down compliance checks more than blurry images or cut-off corners. The documents should clearly show your name, the date, and the relevant financial details.

Consistency is also key. When you fill out your KYC questionnaire, make sure the information matches the documents you provide. If you state that your primary income is a salary but only provide documents related to crypto trading, our compliance team will need to ask further questions to clarify the discrepancy.

If you are ever unsure about what to provide, our support team is available to guide you. By providing the right information upfront, you allow us to focus on what we do best: providing you with a reliable and modern banking alternative.