Source of funds checks: Why bank statements are no longer enough

The SRA’s recent thematic review served as a useful health check for the industry. With 11% of reviewed files missing Source of Funds verification entirely, and many others flagged for lacking sufficient scrutiny, the regulator has signalled a move away from "tick-box" compliance. For compliance experts, the challenge is no longer about understanding the basic requirement, but moving from verifying the existence of funds to verifying their accumulation.

Beyond the snapshot

Historically, a current account statement showing the final balance was often accepted with no issues. Today, under updated guidance from bodies like the CLC and SRA, that statement is only just the start. The regulatory focus has shifted from the ‘snapshot’ (proof that the money exists now) to the ‘narrative’ (proof of how it built up over time). A file containing a statement with an unexplained lump sum, without the corresponding audit trail linking it to a salary, inheritance, or sale, is now a primary vulnerability. The evidence must be much clearer than it used to be.

The value of the rationale

This shift also changes what "good" looks like on a file. It is not enough to just collect the documents; the value now lies in the rationale. The review highlighted that while fee earners often perform the mental risk assessment, they fail to document it. Future-proofing your compliance means ensuring the file note tells the story: explaining why a specific piece of evidence satisfied you, rather than just storing the evidence itself. An auditor should be able to trace your decision-making process without needing to re-investigate the raw data.

How we help you build the full picture

We know that building this narrative manually is time-consuming. That is why we have updated our Source of Funds product to align with this new "accumulation" focus. Our system now goes beyond simple data collection, cross-referencing your client's questionnaire answers against their evidence to automatically flag inconsistencies. Instead of just storing documents, we help you build a comprehensive, audit-ready timeline of your client's funds, giving you the immediate insight needed to document your rationale without the manual chase.