From When is Proof of Source of Funds Required for Your Assets?
If the term proof of source of funds (also: proof of source) does not mean anything to you yet, you should deal with this topic comprehensively now. Otherwise, you will soon be standing at the counter of your bank or at your crypto exchange pretty much at a loss. Therefore, you can find out here when the proof of source of funds will sooner or later find its way into your everyday life and be required of you.
Otherwise, you may find yourself in unpleasant situations in the future, such as blocked accounts or suspected money laundering reports to regulators. However, you can prevent this by informing yourself well and, above all, completely.
Why is it Relevant from When Have to Prove the Source of Funds?
Providing a proof of source of your assets represents a noticeable intrusion into your life from several points of view. However, not everyone will necessarily come into contact with the proof of source of funds requirement on a frequent basis. It is the same with many things: some people will be affected by the proof of origin of funds more often, others less and some not at all.
This depends on your individual daily routine and on how you are financially situated in life. However, all those affected by the obligation to prove their assets for the first time will ask themselves similar questions and give it some thought. It is essential to know which authorities require proof of source of funds for which assets and when.
We would like to support you here in answering these questions.
What is a Proof of Source of Wealth and When Does it Apply?
The purpose of requiring a proof of source of funds is to combat money laundering and terrorist financing. You use it to prove that the source of your financial funds and assets is not the proceeds of crime. The legal regulations originate primarily from the German Money Laundering Act (“Geldwäschegesetz“, GwG) and other special laws as well as European directives. A list of the most important legal bases can be found in our FAQ under the question
Where can I find the legal basis for anti-money laundering?
The general term proof of source is confusing in the context of money laundering. This is because it also occurs in other subject areas, such as environmental law. We do reject this term because it is imprecise. However, we use the term proof of source on this page for clarification purposes. However, the correct term in the context of money laundering is proof of source of funds (also: origin of funds or source of wealth).
The above-mentioned legal principles have undergone considerable tightening by EU legislators in recent months. As a result, the German legislator then has the duty to implement the stricter EU regulations into German law.
Thus, there are always new changes to the legal situation in order to adapt the law to the current circumstances. The question as to when and in which cases proof of source of funds for assets will be required can therefore never be answered definitively for the future. The answer regarding the point in time runs along with the development of the law.
However, we can refer here to the currently applicable legal situation.
According to the Latest Legislation, When Do You Have to Prove the Origin of Your Assets?
Legislators have thus recently tightened up the regulations for combating money laundering and terrorist financing even further. For a long time now, there has been extensive legislation, particularly in the banking sector, to check transactions of various kinds. This has ensured and continues to ensure that money from criminal activities cannot move unhindered and be introduced into the economic cycle.
However, the Money Laundering Act and the German Federal Financial Supervisory Authority (“Bundesanstalt für Finanzdienstleistungsaufsicht“, BaFin), with its latest version of the Application and Interpretation Guidelines for the Money Laundering Act, are now considerably expanding the auditing by so-called obligated parties. They have tightened up the situations and the point in time from which proof of source of funds is to be required.
Obligated Parties Withing the GwG and Specific Date
Obligated parties are literally all entities that are subject to the obligations imposed by the GwG and other special laws. In your everyday life, you usually come into contact with banks, payment service providers, stock exchanges and brokers as obligated parties. The above-mentioned extension of the money laundering regulations with regard to the proof of origin of funds applies as of
August 9, 2021.
According to these latest provisions of the GwG and BaFin, you must provide proof of source of your assets, for example, if you want to deposit more than EUR 10,000 in cash into your account at your bank.
Or also if you want to purchase precious metals such as gold or silver above the limit of EUR 2,500 from a credit institution that is not your principal bank. Another relevant case is certain transactions on exchanges for cryptocurrencies like Bitcoin. There, too, you will have to provide proofs of source of funds at the latest as of the date above.
We describe in detail which documents are suitable as proof of source of funds on our page on possible evidence. There, based on our experience, we also list other possibilities as documents to provide proof of source of funds.
We Support You in Case of Problems With the Provision of the Proof of Origin of Funds
Problems can arise when proving the source of assets. Better said, problems arise when the proof is not provided or is provided inadequately from the point of view of the demanding body.
As already described in our FAQ, the requesting body sometimes has leeway in determining which evidence is sufficient. This leeway harbors potential for conflict. Especially if the person concerned has no other proof and the requesting body does not want to recognize it.
This case is anything but far-fetched. Because even if it is only now being asked for due to new legal requirements: the source of assets can go back a long time. At that time, no one thought about the fact that this source would one day have to be proven.
We are happy to assist you with problems related to the provision of proof of source of wealth. For example, we can:
- check your existing proofs and potential further proofs to be considered,
- help with the appealing compilation of your documents (the overall impression counts!),
- conduct the correspondence with the requesting body,
- request the unblocking of possibly temporarily or permanently blocked accounts (especially on cryptocurrency exchanges).
Depending on the specific case, our support may look different for you. Feel free to write to us without obligation.