What if Your Bank Requires Proof of Source of Your Funds?
Many banks now ask their customers for a proof of source of funds. We have already listed on other subpages when this applies and what you should pay particular attention to when making cash deposits and purchasing precious metals from banks. This page will provide you with further information so that you are prepared for the situation in which your bank requires you to provide proof of source of your funds.
One piece of good news first: the bank actually has no interest of its own in proofs of source of your funds. This is because they involve considerable administrative, personnel and therefore economic effort. However, the state, as the legislator, has introduced the proof of source of funds when certain limits are exceeded to the current extent, but does not remunerate the effort. The interests are therefore clear. In this respect, the bank probably has just as little desire for the proof of origin of funds as you do.
Your Bank Has Already Stored Comprehensive Information When it Requires You to Provide the Proof of Source of Funds!
You may be able to fend off your bank’s question about the proof of source of funds. This is because your bank already has numerous records on file about you. After all, over the course of a long-standing customer relationship between you and your bank, your bank stores vast amounts of transaction data. As a result, your bank already has much more detailed insight into your personal life than you might like to think.
The data includes, for example:
- Money receipts (salary, commission, cash deposits, gifts, real estate sales, Christmas bonuses, etc.)
- Money outflows (direct debits for daily needs, major purchases, etc.)
- Asset transfers
- Capital gains
- Profits from cryptocurrency (Bitcoin) trading
- Refunds from the tax office
- Rental income
In this respect, the first thing to check is whether the bank is not acting “too bureaucratically” by asking about the origin of your financial resources. It could be that the bank is basically exceeding its own competencies without prior self-examination. This is because the bank may not be making use of the numerous data already available.
This is because the bank may also do its own research regarding your account history before asking for a proof of the origin of your funds. However, if this is too burdensome for the bank, it does not justify an automated query regarding the source of your funds.
Therefore, if desired, you can decline to ask the bank for proof of source of funds. In doing so, you refer to the data records of the last years or even decades already available to your bank.
Who is Responsible? Bank Officer or AML Officer of the Bank?
Normally, in the case of suspicious transactions, the bank employee who is also responsible for you will ask you about the source of the funds.
However, bank employees are not specially trained with regard to proof of source of funds. In training or studies, the source of assets is already not or not sufficiently dealt with because the legal obligation for the bank has only recently come into force.
If employees in the bank are unsure about certain account transactions of customers, the matter can also be referred to the internal money laundering officer(s).
Money laundering officers in the bank form a separate department that only takes action with regard to specific suspicions. Normally, a proof of source of funds should not immediately end up on the Money Laundering Department’s desk.
If you are not sure who exactly at your bank is now handling your case after you have requested the proof of origin of funds, you have a data protection claim pursuant to Art. 15 of the Data Protection Regulation to inspect the files and to be informed of the clear name of any case handlers.
Can You Also Provide by Telephone Call if Your Bank Requires You to Provide a Proof of Source of Funds?
Affected persons who are requested by a bank to provide proof of funds have usually received an e-mail or a letter. It is therefore natural to want to pick up the phone and resolve the matter in a straightforward manner.
However, you can tell the bank what you want over the phone. The bank will insist on proof. Evidence is not a phone call in which you explain the circumstances of your account activity. While such a phone can help, a phone call in itself cannot provide proof of the source of funds.
At this point, we would like to point out that an on-site meeting or a telephone call with the bank may well be problematic with regard to proof of source of assets. During an on-site appointment or “live on the phone”, you may share information that you did not actually want or need to share.
What’s the Threat if I Ignore the Question About my Funds?
As a rule, the bank will ask you again. If you ignore this reminder as well, your case will probably be passed on to the money laundering department.
This is because the bank is likely to think as follows:
“Anyone who does not want to provide proof of the source of funds probably has something to hide. As a bank, we don’t want to bear that risk.”
It is obvious that this train of thought is not consistent with the presumption of innocence under the rule of law. In any case, the bank is not an authority that wants to pursue money laundering. Much more, the bank is a company that wants to avoid creating risks as much as possible and to process legal problems such as the proof of source of wealth as quickly as possible.
If ignored, the money laundering department will eventually contact you. If you do not respond to this department of your bank either, you will be threatened with account blocking. An immediate account blocking is usually not to be expected – but in individual cases it cannot be ruled out.
If you also do not react to the threat of account blocking, your account will probably be blocked. You still have the option of transferring your funds further, for example to a new account at another bank or cash withdrawal.
Assume that after repeated ignoring, your case will not only end up on the table of the money laundering department of your bank, but also with the tax office and other authorities (suspicion of money laundering).
Do Not Ignore It, But Respond in a Legally Secure Manner if Your Bank Requires a Proof of Source of Funds!
We have already shown which initial steps you should generally take when providing proof of the source of funds. It is also worthwhile to build up knowledge with regard to the evidence that may have to be provided.
Furthermore, please note our advice on the question as of when proof of source for assets must be provided and what must be observed with regard to cash and the deposit in cash at the bank.