Practical AML guidance you can use before you buy anything.

Source of funds asks where the money for this transaction came from; source of wealth asks how the client came to have money at all. For most standard-risk purchases, a documented source of funds is the operative requirement — statements showing accumulation, a mortgage offer, an evidenced gift.

Source of wealth becomes live when risk rises: unexplained affluence relative to declared income, overseas wealth, PEP involvement or large unexplained balances. The practical test: if the funding evidence only makes sense by assuming wealth you have not evidenced, you have a source-of-wealth question.

There is no statutory number; the requirement is to evidence the story the client told. Three months is a common baseline because it shows the recent pattern; six becomes appropriate when the deposit accumulated recently, when balances jump, or when a single account cannot explain the contribution.

The better question than “how many months” is “does the evidence window cover the accumulation the client declared?” — a £90,000 balance that appears in month two of a three-month window is a question, however many months you hold.

A defensible gifted deposit reconciles three figures: the amount declared by the client, the amount in the signed gift letter, and the credit that actually arrived. Any mismatch — a £45,000 letter against a £40,000 credit — needs resolving on the file, not smoothing over in the note.

Beyond the figures: identify the giftor, confirm the relationship, confirm the gift is non-repayable with no interest in the property, and decide (under your firm's risk policy) whether the giftor's own source of funds needs evidencing — usually yes for large gifts or higher-risk profiles.

A reviewer reading your decision in two years has none of your context. A defensible decision record states: what was referred and why; what evidence you considered; what you concluded and the reasoning; what conditions you attached; and what would have changed your mind.

The most common inspection weakness is not the decision itself — it is a bare “approved, MLRO” with no reasoning. Ten minutes of written rationale at decision time is the cheapest audit protection available to a firm.

An MLRO approval is a decision about a matter as it stood. Material drift — a new party, a changed funding structure, new evidence contradicting the declared story, a screening change — takes the matter outside the approved facts. Treat the earlier approval as expired and re-decide on the current picture, recording the trigger.

Reviewers do not read statements top to bottom; they interrogate them. Four passes cover most of the risk: (1) identity — is this the client's account, covering the right period? (2) income — do salary credits match declared earnings? (3) accumulation — does the closing balance make sense from the flows shown? (4) exceptions — large credits, round-number transfers, third-party payments, rapid in-and-out movement.

Everything in pass four needs a disposition: understood and consistent, queried with the client, or escalated. An exception you noticed but did not record is worse at audit than one you missed.

Reviews tend to follow the same sequence: is there a risk assessment and does the CDD level match it; does the funding evidence reconcile with the declared source; were exceptions dispositioned; were escalations decided with reasoning; and can the file's chronology be reconstructed — who did what, when.

Firms rarely fail on effort. They fail on reconstructability: work that was done but cannot be shown. Build the file as you work and the audit becomes a reading exercise instead of an archaeology project.

Clients cooperate with specific, explained, neutral requests and resist vague or accusatory ones. Three rules: name the exact thing (“the £24,500 received on 14 June”), explain the routine reason (“we are required to understand payments of this size”), and give a concrete way to answer (“a short explanation plus any supporting document is fine”).

Never signal internal suspicion or escalation status in a client message — beyond being poor client care, it risks tipping off. Keep client wording operational: what is needed, why in general terms, and how to provide it.