Funds Checks Show Transfers, Not Legitimacy

Source of Funds checks form a core part of enhanced due diligence, helping banks and fintech companies assess how customers obtained their money and whether transactions present money-laundering risks. Bank statements can document a payment trail, but they do not independently establish that income, asset sales or dealings with counterparties were legitimate. That gap creates a significant weakness when compliance teams rely on transaction records without corroborating evidence.

The latest report said reviewers examining bank statements can confirm only that money moved between accounts, not that the funds were clean or lawfully generated at their original source. The available information identified no financial institution, transaction amount, specific date or individual case. The finding instead highlights the need to cross-check statements against supporting records such as income documents, contracts, tax filings and evidence concerning counterparties.