In this article you will find some of the common reasons why a bank will ask you to confirm where the funds you wish to deposit have come from. Both Raisin Bank and our partner banks may ask you to confirm your source of funds for several important reasons, mainly related to legal compliance, risk management, and financial integrity.
1. Anti-Money Laundering (AML) Regulations
Banks are legally required to comply with AML laws. Verifying the source of funds helps prevent:
-
Money laundering
-
Terrorist financing
-
Criminal proceeds entering the financial system
2. Know Your Customer (KYC) Obligations
Under KYC regulations, banks must understand:
-
Who their customers are
-
Where their money is coming from
-
Whether the activity aligns with the customer’s profile
3. Regulatory Compliance
Governments and regulatory bodies require financial institutions to:
-
Monitor large or unusual transactions
-
Report suspicious activities
-
Maintain records for audits and investigations
4. Fraud Prevention
Asking for a source of funds helps banks detect:
-
Identity theft
-
Inheritance or scam-related frauds
-
Unusual or inconsistent financial behaviour
5. International Transactions and Sanctions Compliance
When money crosses borders, banks need to:
-
Ensure the funds don’t originate from or go to sanctioned individuals, organisations, or countries
-
Avoid international penalties and maintain correspondent relationships
6. Internal Risk Assessment
Banks use the information to:
-
Assess the risk level of a client
-
Decide on account limits, lending eligibility, or investment access
-
Monitor high-net-worth or politically exposed persons (PEPs)
7. Transaction Justification
For large deposits or investments (such as real estate purchases or starting a business), banks may ask:
-
Is this income from a salary, a business sale, inheritance, or a loan?
-
Are there official documents (such as payslips, contracts, or wills)?