Source of funds: where firms are actually getting criticised

The distinction that trips people up

Source of funds is where the money for this transaction came from — the specific account, the specific credits. Source of wealth is how the client came to have money at all. Most residential matters need the former properly evidenced; higher-risk matters need both.

What supervisors find

The recurring finding is not that firms failed to collect anything. It is that the file contains bank statements nobody appears to have read, and no recorded conclusion about what they showed.

Collecting is not verifying. A file that holds three months of statements and no note demonstrates that documents were requested, not that source of funds was understood.

Five things that should be on every file

• A documented risk assessment for the matter, not just the firm.
• Identification and verification of the client, with the evidence retained.
• The source of the funds, traced to their origin rather than to the account they arrived in.
• Where any part of the deposit is a gift, the donor identified and their source of funds understood.
• A written conclusion — a few lines is enough — recording what was checked and what was concluded.

Where gifted deposits go wrong

A gift from a parent is entirely ordinary and entirely legitimate. What is not adequate is recording it as ‘gift from mother’ and stopping. The donor is a third party introducing funds into the transaction, and their source of funds needs to be understood too.

What open banking changes

Open banking lets the client grant read-only access to their account data directly, through their own bank’s authentication. No credentials are shared with the firm.

The output is a categorised analysis rather than a bundle of PDFs: regular income identified, unusual credits flagged, third-party transfers isolated. That is much closer to what a supervisor is looking for, and it takes the client minutes rather than an afternoon.

Published 20 May 2026. This article is general information about conveyancing practice and property regulation. It is not legal advice, and the regulatory position changes — check the current position before relying on it.