Source of funds and source of wealth are the checks generating the most questions right now. Since the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations commenced on 1 July 2026, most firms have settled into a routine for identity verification and screening. These two checks are different. It drew a high volume of questions at our first AML/CTF Check-In session, largely because there is no checklist that tells you when you have collected enough.
This article covers what source of funds and source of wealth mean, when checks are required, what evidence supports them, and what to do when a client cannot give you a clear answer.
The short answer
Source of funds is how the money for a specific transaction was obtained. Source of wealth is how the client built their overall wealth over time. They are mandatory for foreign politically exposed persons, and wherever Enhanced Customer Due Diligence applies and the information is relevant to the risk. Evidence is enough when you can explain where the money came from and support that independently. Your reasoning matters as much as the document.
What is the difference between source of funds and source of wealth?
Source of wealth is the broader of the two, covering how a client accumulated their assets over time through salary, business income, investments or inheritance. For example, a client’s source of funds might be the sale of an investment property, while their broader wealth was accumulated through a business they have operated for 20 years.
The obligation is not always limited to the client in front of you. Where it applies, it can extend to beneficial owners and to anyone the client is receiving the service on behalf of.
Is a bank account a source of funds?
AUSTRAC is clear on this point. A bank account shows where the money was held, not how it was obtained. The source may be salary, business income, loan, inheritance, or proceeds from another sale. Recording only that funds came from a savings account does not establish their source.
When are source of funds checks required?
You don’t have to run a source of funds and a source of wealth check on every matter. Establishing them is an Enhanced Customer Due Diligence (ECDD) measure. It applies where a client presents a high money laundering and terrorism financing risk, and where the information is relevant to the nature of that risk. You must establish it on reasonable grounds as part of initial customer due diligence (CDD) and hold current information as part of ongoing CDD.
There is no dollar threshold attached to these checks. As we covered in our first AML/CTF Check-In session, the trigger is the risk in the situation rather than the size of the transaction. Where risk is high, AUSTRAC expects more know your customer (KYC) work than you would carry out for a low-risk client.
One question from the session puts this in context. Does a vendor who has owned their property for 20 years need a source of wealth check? Probably not, because nothing in that scenario points to high risk. Compare it with a buyer identified as a foreign politically exposed person, or one whose screening returns an adverse result. A foreign PEP triggers the checks in their own right, whatever you conclude about the rest of the matter. An adverse screening result points to high risk, and the checks become mandatory where the information is relevant to the nature of that risk.
How much evidence is enough?
The standard is proportionate to the risk you have assessed. A practical way to test it: can you explain in a sentence where the money came from, and can you point to something independent that supports that explanation?
What documents can support source of funds and source of wealth?
- bank statements
- payslips
- tax returns
- audited financial accounts showing funds disbursed to the client
- sale or purchase agreements, and receipts or records of other transactions
- a probated will, or a trust deed with trustee distribution minutes
- documents detailing share transactions, business activities, a bequest, an insurance payout, or an inheritance
- publicly available registers, including land or property registers and company registers
- loan agreements, and court orders such as a divorce settlement
- proof of gifted funds, such as a written document signed by the person giving the gift
- written confirmation from a legal practitioner or accountant
- investment or capital gains statements
Where nothing else is available, a formal witnessed declaration such as a statutory declaration can support the file. Treat it as a last resort. It records what your client has told you rather than independently supporting it.
Cash deserves particular care. AUSTRAC’s position is that a bank statement showing a large withdrawal does not prove the cash your client is using came from that withdrawal, and a statement showing a large cash deposit does not prove where the cash came from.
What if the money came from someone else?
Gifts and third-party contributions are common, such as parents helping with a deposit. If your client tells you the funds came from a third party, the answer needs to go back one step further. AUSTRAC’s guidance is to record information about that original transaction, which you can verify by requesting documentation such as bank statements relating to the transfer. AUSTRAC also lists proof of gifted funds, for example a written document signed by the person making the gift, as evidence you can rely on.
What if you cannot establish it?
When you can’t establish a client’s source of funds or source of wealth during initial CDD, and establishing it is required, you must not provide the designated service. If you’re considering continuing to act, AUSTRAC expects you to document why you think it is appropriate to continue, take steps to manage and mitigate that risk in line with your policies and submit a suspicious matter report if you have reasonable grounds to form a suspicion.
What should you record on the file?
Firms may save the bank statement and move on. What matters during a review is the reasoning: what you asked, what the client told you, what evidence they provided, and why you concluded that their explanation of how the funds were obtained was reasonable. One document supported by a clear file note is easier to stand behind than three documents with no explanation.
Where your team is unsure how far to go, your policies should have the answer. The triSearch Compliance Centre guides you through client risk assessment and keeps the supporting evidence and your reasoning together on the matter, so the file stands up when it is reviewed.
To see how the Compliance Centre handles source of funds and source of wealth on a live matter, book a walkthrough with your Account Manager. For the full detail, refer to AUSTRAC’s guidance on source of funds and source of wealth and consider your own firm’s policies and advice for specific matters.
triSearch provides software solutions for conveyancing processes. Users remain responsible for compliance with applicable laws and regulations.
