AML alert – Source of funds and savings

27 May, 2025

We have noticed that where a client has informed a practice that they have saved funds for a property purchase over a period of time, some practices are in our view not going far enough to establish the source of funds and are instead only establishing “proof of funds” (which is essentially that the money in question is held in a bank account in the client’s name).

What we sometimes see is practices requesting a standard amount of bank statements in such situations (for example 3 – 6 months). Sometimes statements covering this period do show an accumulation of funds from, for example, salary which would substantiate what the client has told the practice and may therefore be sufficient, depending on the timeframes involved and the nature of the matter.

However, in circumstances where the requested bank statements do not show money going into the savings account from the expected source, or any kind of accumulation of funds over time, the CLC would consider that further efforts are required to discharge your obligations and that more needs to be done to properly establish the source of funds of the savings which goes beyond “proof of funds”.

Care should also be taken where the client has indicated that they have saved money over a significant period (e.g. over 5 years) and practices must be able to adapt their requests for evidence accordingly, going beyond their standard requests where necessary. 

Practices can have a set policy for the timeframe of bank statements requested and obtained for savings which have accumulated over time; however, practices must obtain further evidence in cases where those statements do not show any accumulation of funds. This will likely involve requesting further bank statements and/or asking appropriate follow up questions. It would also be prudent to record what the client’s income is and obtain a payslip to cross reference the savings which are identified, verify that the savings are plausible and that they fit the client’s economic profile overall.

We would recommend that practices ideally have a series of standard questions in the initial purchase questionnaire sent to clients which asks a series of further questions if the client indicates that the money is coming wholly or partly from savings.  These questions might include for example:

1. How was the money saved (please accurately record the source or sources of the savings)?
2. Over what period of time was the money in question saved?
3. The account details for the account where the money is held.

The above is a non-exhaustive list, and practices are encouraged to consider including any further questions which may help to elicit the necessary evidence.  Reviewing the answers clients provide to this questionnaire and then tailoring any further requests for evidence or questions to the client at an early stage is an efficient way of approaching this, however the steps practices take will be dependent on the information the client provides and their personal circumstances.

Further guidance can be obtained from the CLC AML toolkit and in our 2024 compliance notice on source of funds which can be found here (see page 4). There is also a dedicated section for savings in the SOF/SOW checklist that we have developed for practices which can be found here.