How to write a source of wealth file the bank can check

Moving crypto proceeds into a bank account comes down to one document. Somebody in compliance has to be able to say where the money came from, that the coins are yours, and that the story and the numbers agree. Until that document exists, nothing else about your transfer moves.

This post is how to write it, for a history you can reasonably assemble yourself: one or two exchanges, a couple of wallets, nothing you cannot reconstruct over a weekend.

How closely it gets read varies more than people expect. At a retail desk it is one officer, perhaps twenty minutes, and a list of questions they are obliged to answer. On a large transfer, or at a private bank, the same file can be worked for months: an analyst, then a committee, sometimes an external reviewer, coming back with a question about a single movement in 2018. The same document has to survive the skim and the long look, which is why it leads with a summary and keeps its evidence indexed behind it.

That summary is five short pages.

The claim summary, page by page

Those five pages are the claim summary, and they are what a reviewer reads first whatever the size of the case. For a history simple enough to do yourself, they are also the whole file: the summary, and the evidence indexed behind it.

A larger history does not get a different summary. It gets the same five pages at the front and the detail behind them: each section opened up, the flows drawn rather than described, the screening results and what they mean, the reconciliation shown rather than asserted. That is why a full claim file for a real case runs to around thirty pages. Length is not the problem. Length with no summary in front of it is, which is why forty pages of screenshots is the weakest file of all.

Explain at the right altitude

Here is the mistake that costs people the most time, and almost nobody sees it coming.

Asked to explain their wealth, most people try to explain their activity: four thousand trades, or a long list of on-chain expeditions, every protocol tried and every opportunity chased. That is not a document anyone can write, and it is certainly not one anyone will read. The file becomes a wall of exports, and the two or three facts that actually establish where the wealth came from are buried somewhere inside it.

Almost all of it is noise here, and not because it is embarrassing. Most of it landed in losses, so it did not build the position the bank is looking at. Say what you were doing, say what it did to the total, and leave the ventures themselves in the annex.

The officer is not auditing individual movements either. They are testing whether the wealth has an origin that holds together. So explain one level up: at the level of the period and the activity, not the transaction.

That sentence is checkable, it is three lines long, and the four thousand trades sit in the annex supporting it rather than standing in for it. It also does the subtraction honestly: if that period ended at EUR 180,000 rather than EUR 210,000, you say so, and the losses explain a gap the bank would otherwise have to guess at.

It is a simplification, and deliberately so. That is the level your commentary should sit at the whole way through, and there are only two reasons to go below it: a significant event, of the kind page five records, and a question the officer has actually asked.

Keep the main story in front

Most people have one origin of wealth with some noise around it. Lead with the one that built the position and give it the space, rather than granting equal weight to every source because each one feels equally true to you. If you bought in 2016 and held, the purchase is a footnote and the holding period is the story.

Where a balance genuinely has more than one origin, do not merge them. The separation a reviewer needs is not by asset or by year. It is two things:

• Money and token flows. Everything that came into your universe of wallets and exchanges, or left it: your own fiat deposits, anything sent to you by somebody else, and every withdrawal back out.
• Investment gains. What the activity inside that universe added, or took away, without anything crossing the boundary.

Within the first of those, each inflow that is a different story stays a different story. Salary savings, a business sale and transfers from a parent are three source-of-wealth claims, each stated once and evidenced once on its own terms, and third-party money blended into your own is the thing a reviewer is most likely to stop on.

That separation is also where a simple-looking file quietly becomes a hard one. Telling deposits apart from gains means putting a defensible price on everything at the moment it moved, and once value has been traded around several assets, what started as EUR 40,000 of your own money and what is growth on top of it stop being easy to distinguish.

After reading your first page, could a stranger repeat your origin of wealth back to you in three sentences? If not, you are explaining too low.

Give them the data, not a scrapbook

There is a belief, handed down by accountants and bank clerks from a time when nobody could check a blockchain, that a source of wealth file means documenting every movement twice: a screenshot on one side, a confirmation on the other, stapled together in date order. It is the single biggest waste of effort in this whole exercise.

A bank does not want your account of the chain. It wants the primary data and the means to check it itself, which is three things:

• the list of blockchain addresses you control;
• the list of exchanges and accounts you have used, and how the bank can reach that data, by API access or by an export you send them directly;
• your bank statements for the fiat that went out and is now coming back, which confirm the same movements from the banking side.

Give a reviewer that and they will run their own analysis, which is what they are going to do anyway and what they are obliged to do. Adding a folder of screenshots on top does not make the story more credible. It makes it longer, and every extra document is one more thing that can disagree with another.

Documents earn their place only where the data cannot speak for itself: a loan agreement, a deed of inheritance, a contract of sale, the paperwork behind an event on page five. Those are the things no blockchain and no exchange export will ever show, and they are the ones worth assembling carefully.

Prices need a similar discipline. An old trade has more than one defensible price: the exchange quoted you in dollars, your tax report used a different rate, and two public sources disagree on the day by several percent. Nobody expects you to be right to the cent. They expect you to pick one convention, say what it is, and use it everywhere, so your own figures agree with each other even where they do not match somebody else’s.

Say what you cannot prove

Page five is the one people leave out, and it is the one that buys the most goodwill.

Start it with the events, because an unexplained event is worse than an unprovable one. A balance that halves in a week reads as a disposal nobody declared until you say it was a theft and give the date. A sum that appears from nowhere reads as third-party money until you name the inheritance. The officer will see both movements whatever you do; the only question is whether they read your account of them first or form their own.

An exchange that closed and took its records with it, a period where you know what happened but cannot document it, a counterparty you can no longer identify: none of these sink a file on their own. What sinks a file is a reviewer finding the gap themselves after reading three pages that implied there wasn’t one. Name it, say what it represents in euros, say what you did to reconstruct it and what evidence you have instead.

A file that admits two gaps and explains them reads as honest. A file with no gaps reads as too smooth, and the officer starts looking for the one you did not mention.

Before you send it

Read your own file as though somebody else wrote it and you have been asked to find the hole. Better still, hand it to a friend who knows nothing about your crypto and ask them to find it: you cannot unsee what you already know, and they will stop exactly where the officer will. In particular:

• does every euro you brought in and out of the exchanges appear on a bank statement in your name;
• does the file list every address you control and every account you have used, with a way for the bank to pull that data itself;
• does the balance on the explorer today match what pages one and four say you hold;
• do the external flows and the investment gains add up to what you say you hold;
• is every jump in the balance either explained by a movement or named as an event;
• and if the gains are large, can you explain your tax position on them, confirmed by somebody qualified rather than by you.

Six yeses and you have a file that can be reviewed rather than returned. What happens next is the bank’s: it will run its own checks, including a blockchain analytics screen of your addresses for illicit activity, and it may still come back with questions. What it should not come back with is a question you could have answered before you sent it.

Where this stops being a weekend

Everything above rests on one property of a simple history: two movements, both easy to follow end to end. Add a second exchange and a third wallet and you do not get a harder problem, you get dozens of the same problem. Two things multiply at once: the transfers between your own accounts, each of which has to be recognised as yours rather than counted as a sale, and the gain calculation sitting on top of them, which now has to hold across every asset and every price you have used.

What makes a case difficult is almost never exotic activity. It is the distributed nature of a crypto story: one history, held in pieces by parties that do not reference each other. An exchange knows what left it but not where it arrived. The chain knows what arrived but not who sent it. Your bank knows the euros and nothing after them. Nobody holds the whole picture, and nobody but you has a reason to assemble it. Joining those pieces up is the work, and the number of joins grows much faster than the number of accounts.

One of those joins does more damage than the rest, and does it quietly: every transfer between two wallets you own looks like a sale to any tool that only knows one of them. An honest history can arrive at the bank showing gains that never happened, and a tax return that never mentioned them.

If that is your history rather than the one in this post, the method does not change. The amount of it does. Who builds your source of wealth file sets out what each way of getting it done actually costs.

Read next: Prepare your own source of wealth file: the walkthrough, and What goes in a source of wealth file, page by page.

Take the two-minute readiness check. It tells you where the gaps are before you start writing, and it takes no preparation at all.