Does your compliance program have provisioning to ask for SOF (Source of Funds)? Do you know what Source of Funds are? Watch this short quick video that explains what SOF is.
Hello. My name is Faisal Khan I’m a banking and a payment consultant. And the question is what is a source of funds, SOF.
Source of funds is basically a terminology used in the compliance section of banks to tell the compliance officer or the investing…investigating officer, what was the source – how did you get this money?
So, let’s say someone decides to put in forty thousand dollars into the bank, they wire transfer it in. As a bank, now I have the right to ask: How did you make that forty thousand dollars.
Oh it was through a advertisement campaign I did for Nike and Nike paid me.
Can we see the contract?
Or it was capital gains I sold on the stocks.
Can we see the contract in the sales, can you show us the logs.
Oh it was from an ICO that, you know, I got tokens.
Can we see the contract? Can we see the token assignment to you? Can we see the sale of the assignment of those tokens on an exchange that you’ve traded and then can we see the conversion into fiat.
So, the source of funds is identifying HOW you got the money. Where did the money came from and did it come through legal means, illegal means, grey means whatever. It is up to the investigating officer or the compliance officer to ascertain the originality of the money. What is the source of the money: that is what source of funds means.
If you have any questions or comments, feel free to ask in the comments section below, I’ll be happy to answer. Till next time take care.
This page was last updated on September 1, 2022.