Source of Funds and Source of Wealth: Requirements and Differences
Source of Funds and Source of Wealth: Requirements and Differences
Requirements
Regulated Dealers in Singapore are required to obtain the ‘Source of Funds’ (SoF) and ‘Source of Wealth’ (SoW) while carrying out Enhanced Customer Due Diligence (ECDD) for high-risk customers such as politically exposed persons (PEPs), persons associated with PEPs, customers belonging to high-risk countries.
Money Laundering (ML) usually involves disguising, diverting, or concealing the origin of money by purchasing and selling high-value products (such as gold/diamonds/ precious metals and stones) or services or wired through various account transfers.
The primary objective behind obtaining the source of funds or source of wealth documents is to establish legitimacy that the money used for transactions or shown as assets by the customer to prove their means to conduct transactions are not proceeds of crime.
Source of Funds
- Establish that the source of money involved for the particular transaction is within reasonable means of the customer.
- Establish that the goods purchased or services the customer avails are within reasonable means of the customer’s income.
Source of Wealth
- Establishes the overall wealth of the customer or beneficial owners
- Establishes the funds used are within reasonable means of the customer
- Establishes how such wealth was acquired
- Provides information on the reasons for intended or performed transactions.