Category: Compliance & AML · Reviewed by Taylor Watts, Broker · New Business · Last reviewed June 2026
The origin of the specific funds being used in a transaction or business relationship — evidenced by reference to the immediate source (e.g. salary, business income, sale proceeds) and the documentary trail supporting that source.
Source of Funds (SoF) is the specific origin of the money used to fund a particular transaction or relationship. It is distinct from Source of Wealth, which addresses the overall pool of wealth the customer holds. SoF answers the question “where did this particular money come from?” rather than “how did the customer accumulate their overall wealth?”
MLR 2017, regulation 33 (additional measures in higher-risk situations), regulation 35 (PEPs requiring SoF) and regulation 36 (transactions involving high-risk third countries). JMLSG Guidance Part I, chapter 5.5 provides operational guidance.
SoF is required as part of EDD — for PEP relationships, for unusual or complex transactions and for customers from or transactions involving high-risk third countries. Evidence might include payslips, business invoices or bank statements showing trading receipts, sale-of-asset contracts and corresponding bank credits, inheritance grants, gift letters with corroborating donor identification, or compensation letters. The depth of evidence is proportionate to the risk.
For retail consumers SoF evidence is normally less detailed than for higher-risk commercial relationships. For one-off transactions above thresholds (e.g. €15,000) the SoF check stands alone; for ongoing relationships, the firm builds a profile over time and updates it through ongoing monitoring.
A new commercial customer paying a £75,000 annual premium from an unfamiliar source would prompt an SoF inquiry: bank statement evidence of the source of the £75,000, an explanation of why the funds were available, and reconciliation with the customer’s stated business activity.
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692), regulations 33, 35, 36. JMLSG Guidance Part I, chapter 5.
By Matt Bartlett, Director, on 2026-06-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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