Which type of income is proven by which document? A document layout that prevents refusal in an investment file.
In investment programmes, states and banks want to be sure the money invested comes from a legitimate source. This is called "source of funds" (SoF). If SoF documents are incomplete or inconsistent, an application can be refused however high the investment amount.
SoF versus SoW
Source of funds (SoF) is where the money used in a specific transaction came directly from (e.g. a property sale). Source of wealth (SoW) describes how all your wealth built up over time (e.g. career, company, inheritance). A good file covers both.
Documents by type of income
- Salary: payslips for the last three years, social security service record, tax returns and bank statements showing salary payments.
- Business income: balance sheet, profit and loss statement, dividend distribution decision, tax plate and tax payment documents.
- Sale of property/shares: notarised sale contract, title transfer, the buyer's payment receipt and tax documents arising from the sale.
- Inheritance/gift: certificate of inheritance, probate decision, notarised gift declaration and evidence of the donor's source.
- Loan: loan agreement, collateral information and repayment plan.
The money flow map
The route the money takes from the source account to the investment account must be shown item by item with dates, amounts and bank documents. Cash deposits, transfers from third parties and many small inflows are the patterns compliance units query most.
Common mistakes
- Submitting only a summary of documents; full official documents are requested.
- Untaxed income; compliance review catches this.
- Not documenting foreign currency and exchange conversions.
- Inconsistent dates and amounts across different documents.
Preparation time
A simple salary-income file can be collected in three to four weeks, while a complex business partnership and sale file takes eight to twelve weeks. Starting SoF preparation before the investment decision therefore saves time.
You can find details of our source-of-funds and compliance advice on our service page.
SoF from the bank's and lawyer's viewpoint
Banks scan large amounts entering an account with automated monitoring systems. On transfers made for an investment the bank may ask about the source; if you cannot answer within 24-48 hours the transfer may be held. Lawyers want to see the source of funds before having the investment contract signed. Having documents ready speeds up both the banking process and the legal signing process.
Example: a business owner's file
If a business owner will invest with dividends drawn from their company, they must document this chain: the company's incorporation and ownership structure, balance sheets and tax returns for the last three years, the general meeting's dividend decision, evidence that withholding tax was paid, the dividend's transfer into a personal account and from there to the investment account. When each link is backed by a document, the file is ready to pass compliance review.