How to protect your business: Confirming the source of funds

2nd of August, 2023

Our clients turn to us for help in confirming the origin of funds, because in most cases it is difficult to do it on their own, and the usual situation is as follows: banks are in a hurry, the documents are incorrect, the deadline for submitting documents has long gone, contracts with partners are lost or missing, there are no supporting invoices for the transfer of money for goods or services. 

People turn to us when the task is already "burning". Our specialists have the competence to work even with difficult situations, but we ask businessmen to insure in advance against the threat of freezing of accounts, and for this purpose it is enough to entrust our accountants to keep your company's accounts, and then no audit will not be able to damage your business.

Who may require proof of the source of funds

Banks and financial institutions are required to comply with anti-money laundering and counter-terrorist financing laws. Therefore, they have the right and obligation to require their customers, especially legal persons, to provide information on the source of funds and wealth.

When proof of the source of capital is required

  1. Opening a new account: when opening a new bank account. This helps the bank to assess risks and ensure compliance with legislation.
  2. Large transactions: when making large transactions in a bank account. This is because large sums of money can attract the attention of regulatory authorities.
  3. Frequent transactions: if there are frequent transactions on the account. This helps to identify possible irregular financial transactions.
  4. Suspicious transactions: if there are suspicions of questionable fraudulent transactions or links to financial crime.

Consequences if you refuse to explain the origin of funds

  1. Account freezing: temporary restriction of access to funds on the account and great inconvenience for the business.
  2. Risk of loss of trust: the bank may view the client as more risky and unstable, which in turn may affect the terms and conditions of banking services.
  3. Penalties: depends on legislation and bank policy, but in some cases a bank may impose penalties on a customer for non-compliance.
  4. Denial of services: some banks may refuse to provide additional services or loans. 
  5. Referral to regulatory authorities.
  6. Loss of reputation.

The terms "Source of Origin of Wealth" and "Source of Funds"

  • "Source of Origin of Wealth" describes the basis of financial position or equity. It may be inheritance, general accumulated assets, financial support from family, or other sources that provide financial stability.
  • "Source of Origin of Funds" describes where the funds used to finance transactions in the bank account came from. This can be income from employment, bonuses and bonuses received for productivity, business income, or the sale of property.

How Intelligent Solution Group helps

Intelligent Solution Group will provide you with assistance in financial and banking law. Our employees are lawyers and former bankers with extensive experience in this field.

We accompany our clients all the way to confirming the source of funds, collecting and executing the necessary documents and preparing responses to bank inquiries. Our team is ready to help your legal entity effectively deal with the banks' requirements and ensure full compliance with the legislation.

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