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Source of Wealth (SoW)
In financial compliance, Source of Wealth describes the origin of a customer’s total assets and net worth, such as income from employment, business ownership, inheritance, investments, or asset sales. Financial institutions assess SoW as part of customer due diligence to understand whether a customer’s wealth is consistent with their profile and to identify potential money laundering or financial crime risks.
Synonyms
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Acronyms
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SoW
Examples
For example, when onboarding a high-net-worth individual, a bank may assess the customer’s Source of Wealth by reviewing evidence such as long-term business ownership, dividends, property sales, or inheritance records. If the declared wealth aligns with the customer’s background and activity, standard due diligence may apply. If inconsistencies are identified, the bank may request additional documentation or apply enhanced due diligence.
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FAQ
What is the difference between Source of Wealth and Source of Funds?
SoW describes the origin of a client's total assets, while SoF refers to the specific funds being used in a transaction.
What documents can be used to establish SoW?
SoW can be supported by tax returns, payslips, audited accounts, property deeds, inheritance documents, share transaction reports, etc.
When is SoW information required vs. nice to have?
SoW is required for high-risk clients like PEPs and should be established whenever a client's wealth doesn't match their profile.
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