As governments around the world begin to clamp down more aggressively on global money laundering activities, as well as closing off channels used to fund international terrorism, regulatory compliance is of vital importance.

The onus to ensure that every check and procedure is completed is on individual financial institutions, e-payment service providers, online gaming sites, and other types of enterprise where some form of financial transaction occurs during the course of their day to day operations. KYC (Know Your Customer) and client onboarding processes are just two examples of the steps necessary to ensure compliance.

However, in order for businesses and financial institutions to be seen to be going the extra mile, there are two additional checks that can be undertaken. These are known as Source of Wealth (SOW) and Source of Funds (SOF) checks and, while the two are often mistakenly confused as one and the same, they are in fact separate checks, each with its own definition.

Source of Wealth checks specifically deal with how a client under scrutiny, actually acquired their funds to begin with. For example, did they acquire their wealth through an inheritance of sorts? Through investments or the sale of real estate? SOW checks can play a vital role when it comes to going the extra mile to ensure that your client and their funds are from a legitimate source, thereby reducing the risk of indirect money laundering complicity.

Source of Funds checks specifically deal with where a client’s funds are drawn from. For example, does the client have a bank account held in the United Kingdom (or other countries)?

It’s clear that poor customer service is bad for business, but the financial implications might surprise you. A 2024 study revealed that globally, businesses lose approximately $3.7 trillion in sales each year due to negative customer experiences. Customer satisfaction has reached its lowest since 2010, highlighting an urgent need for improvement.

Compliance as a process is a topic often in the shadow of major news. However, identity checks are a critical part of doing business securely and reducing risk. For most businesses, when considering compliance, top of mind are painful implementations, time-consuming submissions, and costly administrative tasks.