Source of funds
Source of funds is evidence of where specific money or crypto came from: salary, a sale, savings or trading profits. Banks and crypto services ask for it during AML checks.
How it works
A bank or crypto service may ask you to prove your source of funds for a large deposit or withdrawal, higher limits or an unusual transaction. It is part of AML checks. What matters is not only who you are but where this particular amount came from.
Good documents link the money to a legal origin: payslips or income statements, bank statements, a contract for selling property, exchange statements with buy and sell history, transaction hashes and tax returns. For crypto a clear chain is especially valuable: fiat went from your bank to an exchange, bought coins, the coins grew, and they were sold.
There is a related term, source of wealth. It describes how you built your assets overall, while source of funds is where the specific amount in a specific transaction came from. A service may ask for either or both.
You want to move $30,000 from an exchange to your bank. The bank asks for source of funds. You show a statement where two years ago you sent $8,000 from your account to the exchange, the history of buying BTC with it, and selling for $30,000. The chain is clear and the transfer is approved.
The most common mistake is not keeping records from the start and losing access to old accounts and statements. Years later, proving where a large sum came from without them is very hard. Download exchange and bank statements every quarter, keep them with the hashes of large transfers, and answer checks honestly and fully.
Questions and answers
What is source of funds in simple terms?
It is showing with documents where this money or crypto came from.
What documents prove source of funds?
Income statements, bank statements, sale contracts, exchange statements with trade history and tax returns. The service doing the check will say exactly what it needs.
What happens if I cannot prove my source of funds?
The transaction can be declined, the funds held, and the account limited or closed. It is better to gather documents in advance than to argue after a freeze.
Related terms
Read next
The big picture: when crypto may trigger a tax, how gains are calculated and which records to keep. This is not tax advice:…
Read →Tax-loss harvestingTax-loss harvesting is selling an asset at a loss so the realised loss reduces taxable gains from other trades. It…
Updated: 2026-10-19