Proof of Sources of Funds or PoSoF is one or several documents providing information on the origin of funds that are being used in a particular transaction.
Any submitted PoSoF documents have to cover all withdrawals, previous as well as the most recent ones, and deposits made via the funding method in question.
When and where clients are asked to submit a proof of source of funds
Naturally, these measures are a part of an AML policy necessary for every type of business involving money transactions. Compliance with the anti-money laundering regulations prevents frauds from inflicting reputational damage on the company and eliminates the risk of substantial fines that come along with the accusation.
In particular, SoF has to be verified when an individual’s financial capabilities are in question.
It is a common case for mortgage inquiries when a note from the bank helps landlords to understand whether the potential tenant can afford the mortgage. Banks are certainly more inclined to issue a positive statement if the individual can provide a PoSoF, while those with insufficient funding will likely be rejected.
What a valid proof of source of funds does for the company
- It confirms that the individual in charge of completing certain transactions is actually you;
- PoSoF allows businesses to ensure safety, fight fraud and avoid being linked to illegal activities;
- It is one of the multiple mandatory AML requirements to acquire a PoSoF before carrying out any transactions and is closely observed by jurisdictional regulators deciding whether the business is eligible to operate as a financial company.
- Financial Documents
- Business Documents
- Real Estate
- Other Sources
- documented proof of funds transferring;
- a personal statement explaining the details and circumstances of how the gift was presented;
- documents proving the source of funds of an individual who made the gift;
- tax return on the gift.