Adopting reasonable measures to establish the legitimacy of a
customer's source of wealth ("SOW") and source of
funds ("SOF") is a regulatory requirement all banks need
to comply with. But how much digging does a bank really need to do
to get comfortable with a customer's wealth journey? The
following summarizes some key points Private Banks should keep in
mind in reviewing their approach to SOW:
- The extent of corroboration required should align with
a customer's risk rating
Regulators are keen to see banks demonstrate how they are
effectively assessing, documenting and mitigating the AML risks of
their customers. Adopting a risk based approach, low and medium
risk customers typically require less corroboration on SOW. Whereas
for PEPs and high risk customers, a greater standard of
corroboration is expected to address the additional risk factors
which have led to the higher risk rating of these customers. The
SOW narrative must be sufficiently informative,
