If you’re wondering why a bank is asking for source of funds in the UK, you’re in the right spot…
In this article, we’re going to explore the most common reasons why a source of funds is requested and explore what you might be required to provide to the bank.
This article will also be relevant to anyone thinking about banking in the UK. After all, opening a bank account is only the first step, the second is keeping it open.
So, whether you’re trying to open an account without residency documentation or a UK bank account without proof of address or you’ve had a UK bank account for years, read on for more insights.
Feel free to jump ahead to the areas most relevant to you by using the table of contents below.
Table of Contents
- Source of Funds 101
- Why Do Banks Request Source of Funds?
- Examples of Source of Funds
- What to Do When a Bank Is Asking For a Source of Funds?
- Do You Want Help Opening Bank Accounts?
Source of Funds 101
Whether you bank in the UK or elsewhere, it’s not uncommon for banks to periodically request documents to support a transaction, this is commonly referred to as a source of funds.
Depending on the reason that a transfer was flagged by the bank, the requested documents to support the source of funds can range from a simple written explanation to audited statements.
That said, in most cases, banks will want to see a combination of a written explanation along with clear documentation that supports the transaction. Accepted documentation typically takes the form of a contract, invoice, or similar document.
Below we’ll take a closer look at different types of documentation that UK banks often accept to support source of funds.
Alternatively, if you’re looking for the specific banking documents and what you need to open a bank account in the UK, follow this link as we share a list of the account opening requirements non-residents need to prepare for.
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Why Do Banks Request Source of Funds?
Generally speaking, a bank might be asking for source of funds if a transaction meets any of the following criteria:
- Transacting with a new individual or company
- Transaction value is higher than normal
- Sent from or to a grey or blacklisted country
- Sent by or to an individual or company listed in a compliance database
- Sent from or to a high-risk industry (e.g. crypto exchange)
- Multiple transactions back-to-back to the same party
- Depositing a large check from the sale of an asset
Examples of Source of Funds
If a bank requests a source of funds, they are typically looking to understand the purpose of the transaction and to confirm that the transaction complies with their policies.
With this in mind, here is a list of common supporting documents that UK banks accept from account holders:
- Written explanation of the transaction and the parties involved
- Invoice for services rendered
- Contract explaining services being delivered
- Bill of sale (for large sums resulting from an asset sale)
There are other examples of commonly accepted sources of funds that banks accept as well. However, we share these with members of GlobalBanks IQ and GlobalBanks Insider.
What to Do When a Bank is Asking for Source of Funds?
While many people get offended by banks asking questions about transactions or probing for information about related parties, it’s important to remember that compliance teams are just doing their jobs.
And, in most cases, the job that compliance teams carry out is simply following up on transactions that have been flagged by their internal systems. In other words, if a bank representative contacts you for information, they didn’t personally single you out for an investigation – your transaction did that for them.
With this in mind, If a bank requests a source of funds, you need to answer their request with enough information to satisfy their query. Using the information above, you should be able to navigate the bank’s questions and get back to your regular banking activities.
Of course, if you need more direction, you can always join either GlobalBanks IQ or GlobalBanks Insider and access a wider range of account opening intelligence. This includes detailed scripts that walk you through the conversations between account holders and compliance teams and the common responses that people use when answering.
If this is your first time opening a bank account in the United Kingdom, you might be wondering what a bank and banking society number is. Fortunately, we share the similarities and differences between the two in the link above.
Do You Want Help Opening Bank Accounts?
If so, you can access GlobalBanks Insider and start the process of applying for an offshore account in a few clicks.
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+ Plus FULL access to our entire suite of account opening tools and intelligence!
And “yes!” GlobalBanks Insider is designed to help foreign and non-resident individuals and companies open bank accounts.
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