With increasing regulatory requirements and trends toward greater transparency, understanding the Source of Funds (SoF) and the Source of Wealth (SoW) of the Beneficial Owner (BO) has become a cornerstone in the Customer Due Diligence (CDD) process, particularly for legal entities. Collecting such information during the on-boarding process is part of the CDD sets of controls which seek to address greater money laundering, financial crime and terrorist financing risks. First of all, the term SoF refers to the origin of the particular fund and any other monetary instrument which are subjects of the transaction between a Financial Institution and the customer. For example, the SoF for a legal entity can be :
- Funds related to ongoing flows from operations in GBD or USD or CHF;
- Assets disposal from the sold subsidiaries;
- Funds from the future acquired companies.