Understanding where money has come from is more important than ever before. The origin of your customers capital could be very telling, especially in today’s global economy where transparency and compliance with financial regulations are paramount.

Understanding the source of funds not only helps businesses mitigate risks associated with money laundering and financial crime, but it also ensures adherence to international compliance standards and regulatory requirements.

Knowing the origin of capital can also assist businesses in making informed decisions about their client relationships. It enables them to assess the legitimacy and ethical implications of entering into certain transactions, thus protecting their operations from potential reputational damage.

What Are Sources of Funds?

Source of funds can vary significantly, ranging from steady streams of income to one-time gains, each with its own implications for financial transparency and compliance.

1. Regular Income: This typically includes salaries, wages, and business profits. These are recurring and can usually be easily verified through bank statements, pay slips, or financial statements. Regular income is considered a stable and reliable source of funds, often reflecting a customer’s employment status or ongoing business activities.
2. One-Time Gains:
   • Inheritance: Funds derived from inheritances can involve large sums of money transferred after the death of a family member or a friend. These require specific documentation such as wills, probate forms, and death certificates to ensure their legitimacy.
   • Property Sale: Money from the sale of property can also represent a substantial amount of capital. Property transactions should be supported by legal documents such as deeds, contracts of sale, and statements from real estate agents or solicitors to verify the source.
   • Investment Returns: These can include dividends, capital gains from the sale of stocks, bonds, or other securities, and payouts from various investment funds. Such sources are verified through financial statements, brokerage accounts, or dividend notices.
3. Gifts and Donations: Sometimes, individuals receive significant amounts of money as gifts or donations. These can be more challenging to verify, but typically require affidavits or letters from the giver, stating the nature and purpose of the gift, along with their own source of funds.

Each type of income or gain comes with its own set of regulatory scrutiny and requires different documentation for verification. Streem Verify is able to single out, locate, and verify such sources on the customers bank statements thereby making sure the money originated from the clients’ genuine and legal origins. This makes it essential for sectors that take care of normative transparent monetary transaction businesses, including accountancy, banking, insolvency, real estate, and legal services.

How far does the Source of Funds go back?

Streem Verify provides a detailed two-year history, significantly enhances the ability of financial institutions to conduct thorough due diligence. This historical insight into a client’s financial behaviour is critical in adhering to strict regulatory standards, particularly in the areas of anti-money laundering (AML) and combating the financing of terrorism (CFT).

Here are a few key ways in which a two-year financial history benefits due diligence processes:

1. Identifying Patterns: A longer history allows the identification of consistent patterns of income and expenditures. This helps in distinguishing between regular income sources and occasional, potentially suspicious, large transactions.
2. Establishing Financial Stability: A two-year timeline is particularly useful for assessing the stability of a client’s financial status. It provides a broader perspective on their financial health, including how they manage debt, income fluctuations, and expenditure.
3. Verifying Source of Funds: For significant transactions, such as large deposits or investments, a detailed financial history helps verify the legitimacy of the source of funds. It can indicate whether these funds are consistent with the client’s financial behaviour or if they deviate in a manner that might suggest illegitimate sources.
4. Risk Assessment: By examining financial trends over two years, you can better assess the risk level associated with a client. This includes spotting any high-risk activities, such as transactions linked to high-risk jurisdictions or industries known for financial impropriety.
5. Regulatory Compliance: Regulatory bodies often require financial institutions to maintain and examine extensive records of their clients to prevent and detect illicit financial activities. A two-year financial history enables compliance with these regulations by providing sufficient data for review.
6. Enhancing Customer Relationships: This level of diligence also helps in building stronger, more transparent relationships with clients. By understanding their financial background comprehensively, banks can offer tailored financial advice or products suited to their needs.

Benefits of using Streem Verify:

1. Saves time: Seamlessly integrates into your current workflow without slowing you down. Source of funds can be obtained in minutes with a simple link being sent to the account holder. The account holder follows a 20 second process on their mobile phone or any other device. Once that is complete you have access to bank statements you can download in PDF or excel format.
2. Search and filter: Easily and quickly filter the transactional information to find the transactions and data you are interested in. Going through a bank statement line by line is time consuming and unnecessary in a digital world. You can filter and search directly in Streem Connect.
3. Strengthen Regulatory Compliance: With a source of funds report coming directly from the bank through Streems utilisation of the open banking system you can be confident the data is accurate and fit for purpose.
4. Simplify Your Customer Experience: By making it as simple as possible for customers to connect and share data you can get the information you need without making the customer jump through hoops or search through old bank statements looking for the documents needed. This takes the pressure off them and you, giving you more time to work on the account and less stress for the customer.
5. Cost-Effectiveness: Streem Connect allows you to save a large number of man hours that would otherwise be spent on the phone or sending emails asking customers to provide you with the required documents. With a 20 second linking process you get the information you need straight away making Streem Connect and Streem Verify extremely cost effective to your business.

Conclusion

Understanding the source of a customer’s funds is not just a regulatory requirement but a fundamental aspect of modern financial management. By incorporating tools like Streem Verify, businesses can streamline their compliance processes, enhance due diligence, and build stronger, more transparent relationships with their clients. With the ability to provide a detailed two-year financial history, businesses are better equipped to identify patterns, assess risks, and ensure financial stability. The integration of such technology into your financial workflow not only simplifies regulatory compliance but also offers significant time and cost efficiencies, making it an invaluable asset for anyone in the financial sector.

Frequently Asked Questions (FAQs)

1. What is the source of funds check?

• A source of funds check is a process used by financial institutions to verify where a customer’s money originates. This helps ensure that the funds are derived from legitimate sources, complying with anti-money laundering (AML) regulations.

2. Why is verifying the source of funds important?

• Verifying the source of funds helps prevent financial crimes such as money laundering and fraud. It also ensures that businesses do not inadvertently engage in illegal activities and helps maintain their reputation by associating with legitimate sources of capital.

3. How does Streem Verify integrate with my current systems?

• Streem Verify seamlessly integrates into existing workflows via the use of open banking technology, allowing businesses to access and verify bank statements and other financial data quickly without requiring extensive manual effort from the customer.

4. Can Streem Verify help with compliance?

• Yes, by providing detailed and accurate financial histories, Streem Verify helps institutions meet the stringent requirements set by regulatory bodies for anti-money laundering (AML) and combating the financing of terrorism (CFT).

5. What types of transactions can Streem Verify help identify?

• Streem Verify can help identify various types of transactions, including regular income, one-time gains, large deposits, and investments. This aids in assessing the legitimacy and compliance of these transactions with financial regulations.