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Searching for the Source of Wealth

The rise of regulations

Today’s Wealth Managers have a burden of responsibility to meet global anti-money laundering regulations and one of the most critical, yet challenging obligations can be checking a client’s Source of Funds and Source of Wealth.

Source of Funds and Source of Wealth checking are so important because they are the foundation in establishing the financial background of a client and the cornerstone of Enhanced Due Diligence. Both checks can help to identify if funds are the result of criminal activities or corruption and should be included as part of your AML risk assessments for high-risk clients. Understanding the legitimacy of your client’s wealth will significantly reduce the risk of your firm being used for money laundering.

Money can’t hide

You might not need to confirm the Source of Funds and Source of Wealth for every client but where you have identified a client or matter as high-risk due to the jurisdiction, the value of a transaction or a transaction that involves a Politically Exposed Person, then these checks play an important part in identifying potentially money laundering activities.

Source of Funds and Source of Wealth are two very different checks. Source of Funds refers to where the money is coming from for a particular transaction, including the bank and account details. This will require obtaining copies of bank statements which provide the evidence on the ownership and movement of the funds. By collecting information for each transaction, you can then check that each transaction is funded by separate sources. For some clients, a Source of Funds check is sufficient in relation to the size of their estate and the transaction involved.

For higher risk clients such as a Politically Exposed Person, a Source of Wealth check will also be required. Source of Wealth refers to the wider circumstances of the client and how they made their money. This Enhanced Due Diligence check will help you build a picture of why and how the client has accumulated their wealth. You don’t necessarily need to account for all their assets, but you do need to confirm that their overall wealth was generated through legal means, such as business activities or inheritance. The documents you need to assess will vary from client to client, and could include property portfolios, share registers, audited accounts, or anything else that can confirm how your client made their money and the general size of their estate.

Keeping the record straight

Once you have all the documentation for checking a client’s Source of Funds and Source of Wealth you also need to ensure that your reasoning for any decision is recorded. This will ensure you have detailed records of what you have done to satisfy the requirements and how it meets your compliance obligations.

Maintaining these records are, therefore, just as important as the checks themselves. Software can play a vital part in assisting you manage them. WealthWorks+ is the cutting-edge entity management software that can do just that. You can record Source of Funds and Source of Wealth for a transaction, keep track of risk profiles and be alerted to upcoming compliance review dates. Organisational Charts that map out corporate structures, and identify beneficial owners and family connections, can also help establish the Source of Wealth and are automatically generated within the platform.

Warranted with WealthWorks+

With every document also easily stored within the platform it makes it effortless for other departments to assist in reviewing client documentation and prevent duplicates being requested. So, not only does WealthWorks+ help you to meet your compliance obligations but it also helps you to provide a better service to your clients. 

Contact us today to find out more about WealthWorks+ and how it can help you meet your AML obligations.

 

 

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