Client intake Current

Requesting source-of-funds information for a higher-risk matter

A practical approach to asking about the origin of funds.

Some matters call for a closer look at where a client's funds came from, particularly when a client, service, or delivery channel is assessed as higher risk. This guide sets out a practical, respectful way to ask. It is general information, not legal or compliance advice.

Action plan

1 Know when a source-of-funds question is needed Source-of-funds questions generally apply when a matter, client, or channel is assessed as higher risk.

Enhanced customer due diligence, including asking about the source of a client's funds, generally applies when a client's money-laundering or terrorism-financing risk is assessed as higher, or in other specific circumstances your firm's AML/CTF program sets out. Whether a specific matter meets that threshold is a determination for your firm to make, not Vertical Flows.

  • Check your firm's own risk assessment for whether this matter or client is higher risk
  • Confirm against your firm's AML/CTF program whether enhanced due diligence applies
  • Document why the source-of-funds question is being asked

Done when: A documented basis exists for why the source-of-funds question applies to this matter

AUSTRAC: overview of customer due diligence
2 Ask clearly, and explain why A short, matter-of-fact explanation generally reduces how intrusive the question feels.

Clients generally respond better when the request is framed as a standard part of your firm's process for this type of matter, rather than as a suspicion about them personally. A short explanation that this question is asked for every matter that meets the same risk criteria helps set that context.

  • Explain that the question is a standard part of your process for matters like this one, not specific to them
  • Ask directly and simply where the funds for the matter came from
  • Avoid technical or accusatory language

Done when: The client has been asked clearly and given a plain explanation for the request

AUSTRAC: overview of customer due diligence
3 Ask for evidence that supports the client's explanation Where practical, ask for documents that corroborate the stated source of funds.

A client's explanation of where funds came from is generally stronger when supported by documentary evidence, such as a settlement statement, an employment record, or evidence of a prior sale. What evidence is reasonable to request depends on the specific explanation given.

  • Ask for documents that support the client's stated source of funds
  • Match the evidence requested to the specific explanation given
  • Keep the supporting evidence with your other due diligence records

Done when: Supporting evidence for the stated source of funds has been requested and reviewed

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4 Escalate if the answer is inconsistent or incomplete An explanation that does not add up is a matter for your firm's own escalation process, not a workaround.

If a client's explanation of the source of funds is inconsistent, incomplete, or cannot be supported by evidence, escalate it through your firm's own AML/CTF program rather than proceeding on the basis of an unresolved answer.

  • Escalate an inconsistent or unsupported explanation through your firm's own process
  • Do not proceed with the matter on the basis of an unresolved source-of-funds question
  • Document the escalation and its outcome

Done when: An inconsistent or unsupported source-of-funds explanation has been escalated through your firm's process

AUSTRAC: overview of customer due diligence