Source of Wealth (SoW) describes how an individual or entity acquired their total wealth, not just the funds for a specific transaction. It may include income from employment or business, investment gains, inheritance, or the sale of assets.
SoW is distinct from Source of Funds, which focuses only on the origin of money used in a specific transaction.
SoW checks allow regulated firms to assess whether a client’s wealth is commensurate with their known profile and to identify potential financial crime risks.
Under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, SoW is often required for high-risk clients, including politically exposed persons (PEPs), or for large and complex transactions.
Q: How is Source of Wealth different from Source of Funds?
A: SoW is about the origin of a person’s overall wealth, while SoF relates to the money used in a specific transaction.
Q: Is SoW always required?
A: It is generally mandatory for regulated entities, high-risk clients or large transactions, but many firms choose to collect it as part of enhanced due diligence.