Information on the Proof of Source of Funds

With the proof of source of funds you provide evidence that the source of your financial means and other assets are not profits from serious crimes. The proof of the source of your funds usually consists of several documents. You submit these in the prescribed form to the office requesting the proof of source of funds.

source-of-funds.com is your information portal for proving the origin of financial assets. Here you will find all the important information and practical tips on how to deal with the obligation to prove assets.

Some of the most important legal principles for combating money laundering and terrorist financing and the requirement of proof of source of funds in Germany (as one example for the legal situation in the European Union) can be found under the following links:

• Money Laundering Act ("Geldwäschegesetz", GwG)
• BaFin application and interpretation notes on the GwG
• BaFin application and interpretation notes on the GwG (especially for credit institutions)
• "AML1 Directive": Directive 91/308/EEC on the prevention of money laundering
• "AML2 Directive": Directive 2001/97/EC on the prevention of money laundering
• "AML3 Directive": Directive 2005/60/EC on the prevention of money laundering
• "AML4 Directive": Directive (EU) 2015/849 on the prevention of money laundering
• "AML5 Directive": Directive (EU) 2018/843 on the prevention of money laundering
• "AML6 Directive": Directive (EU) 2018/1673 on the prevention of money laundering
• Common guidelines on risk factors for money laundering pursuant to Directive (EU) 2015/849

A bank, broker or other entity requires you to provide proof of the source of your assets (e.g. cash, precious metals or cryptocurrencies like Bitcoin) because the Money Laundering Act obliges them to do so in certain situations. The entities are so-called obligated persons in the sense of the Money Laundering Act.

No, the obligation to present proof of the source of funds is aimed in particular at cash. However, numerous other assets may be affected, such as precious metals like gold, silver and platinum, precious stones, jewelry and watches, cryptocurrencies. Works of art and antiques, motor vehicles, ships, motorboats and aircraft.

The German Money Laundering Act (as an example for the legal situation an the European Union) regulates which authorities may demand proof of the source of funds from you. The relevant provisions are very extensive and detailed. The following list is therefore abbreviated as far as special circumstances or exceptions for the named entities are concerned.

The following entities are obligated parties within the meaning of the Money Laundering Act. In certain situations, they are therefore obliged to provide information and to obtain information on the source of funds:

• credit institutions (e.g. banks),
• financial services institutions (e.g. brokers, exchanges and crypto exchanges),
• payment institutions, e-money institutions and corresponding agents (e.g. PayPal),
• independent traders distributing or redeeming e-money of a credit institution,
• insurance companies when offering certain products,
• insurance intermediaries under certain conditions,
• capital management companies,
• lawyers, legal advisors, patent attorneys, notaries in the case of certain services for their clients,
• legal advisors who are not members of a bar association, for certain services,
• auditors, certified public accountants, tax consultants, tax agents and certain associations,
• service providers for companies and for trusts or fiduciaries who do not practice certain legal professions, for certain services,
• real estate agents,
• organizers and brokers of games of chance under certain conditions,
• dealers in goods, art brokers and art stockists under certain conditions.

The obligation to demand proof of origin of funds is precisely defined in the German Money Laundering Act (as one example for the legal situation in the European Union). In everyday life, the following situations are currently likely to be of particular importance:

1. Depositing more than EUR 10,000 of cash at your bank into your current account,
2. Deposit or withdrawal of fiat money at your cryptocurrency exchange,
3. Cash purchase of precious metals worth more than EUR 10,000 at your local bank or more than 2,500 EUR at a credit institution that is not your local bank.

There are numerous other situations where proof of source of funds is required, e.g. real estate transactions. The above limits may change over time.

On our evidence page, we provide detailed information on possible evidence that you can submit as proof of source of funds. The German Federal Financial Supervisory Authority ("Bundesanstalt für Finanzdienstleistungsaufsicht", BaFin) states that in this situation, the following documents in particular can be meaningful proof of the source of funds:

• account statement of an account of the customer at another bank from which he withdrew the money,
• account statement of an account of a third party from which the cash was withdrawn and, in addition, other documents and information concerning the third party,
• cash withdrawal receipt from another bank from which the cash was withdrawn,
• passbook with withdrawal receipt,
• sales receipts or invoices (e.g. invoice in case of sale of gold),
• receipt for exchange transactions concluded (e.g. exchange of foreign banknotes and coins),
• will, certificate of inheritance or other proof of inheritance,
• gift contracts and gift notification.

The above list is not exhaustive. Each bank may determine for itself which other documents it will accept as proof of source of funds. It may take into account special circumstances of the specific situation (e.g. death, wedding, birthday).

If you are unable or unwilling to provide the required proof, the demanding body will reject the transaction. Currently, it is even common for cryptocurrency exchanges to suspend accounts without prior notice. This is until you provide appropriate proof of the source of your wealth.

In connection with the storage of your data, the German Money Laundering Act (as one example for the legal situation in the European Union) speaks of the so-called "recording and storage of data collected and information obtained".

A record - regardless of the information - can always be made by printing out the information. However, the German Money Laundering Act explicitly regulates that the requesting body may also store your records digitally on a data carrier. In our experience, digital storage of records is the rule.

If the demanding body stores the records digitally, it must keep its records available and be able to make them readable at any time within a reasonable period.

How long your bank or broker or other requesting entity must retain your proof of source of funds information is governed by the German Money Laundering Act (as one example for the legal situation in the European Union). It contains, among other things, provisions on the recording and storage of the information collected from you and the information obtained on the proof of source of funds.

According to the German Money Laundering Act, the office that requests details and information from you on the proof of source of funds must keep these for at least five years. However, this minimum retention period may be significantly longer if the requesting entity is required by other special laws to retain the information for a longer period.

As a rule, the five-year period begins at the end of the calendar year in which you provided your details and information on the proof of source of funds.