Source of Funds (SoF)
Definition
Source of funds (SoF) is the origin of the money used in a specific transaction: where these particular assets came from. Compliance teams request SoF documentation to confirm assets are not proceeds of crime. It differs from source of wealth (SoW), which explains how a person built their overall net worth.
SoF vs SoW
| Source of Funds | Source of Wealth | |
|---|---|---|
| Scope | One transaction or balance | Entire net worth |
| Question | Where did this money come from? | How did you become wealthy? |
| Typical evidence | Exchange statements, purchase records, transaction history | Employment history, business ownership, inheritance records |
| When asked | A specific transfer is under review | Enhanced due diligence, private banking onboarding |
What counts as SoF evidence for crypto
- Exchange account statements in your name showing purchases and withdrawals.
- Fiat on-ramp records: bank transfers or card receipts matching the exchange deposits.
- On-chain transaction history connecting the purchase to the wallet under review.
- Proof of wallet ownership: a bare address list proves nothing about control.
- Proof of the income that funded the purchases: payslips, invoices, tax returns.
Where a KYW certificate fits
A tax report shows what you declared; it does not show whether a wallet is yours or what its history touched. A KYW certificate covers exactly that gap (AML/KYT screening plus cryptographic ownership proof in one verifiable PDF) and complements, rather than replaces, your exchange statements and purchase records.
FAQ
Can a bank legally ask where my crypto came from?
Yes. EU and UK anti-money-laundering rules oblige institutions to understand the source of funds in their customers' accounts; a crypto-linked transfer is a common trigger for that review.
Is a tax report enough as SoF evidence?
Often not on its own. A tax report addresses declared gains, but reviewers also ask whether the wallet is actually yours and whether its history is acceptable: questions a tax document does not answer.
Guides on this topic
Free basic check · no card, no KYC upfront