Source of Funds vs Source of Wealth: what your bank is actually asking you to prove

Your bank asks you for “proof of source of funds”. You send a CSV export from your exchange, a screenshot of the balance, and a sentence explaining that you bought Bitcoin in 2017 and it went up.

Three weeks later they ask again, using slightly different words.

This is the single most common way a legitimate cashout stalls, and it is almost never because anyone suspects you of anything. It is because the bank asked two questions and got an answer to neither.

The two questions

Source of Funds is about the transfer. Where did this specific money come from, immediately before it reached us? For a crypto cashout, that is: you sold 0.5 BTC on Kraken on the 14th, Kraken paid EUR 45,000 to your account, here is the trade confirmation and the withdrawal record.

Source of Funds is usually easy. The exchange has the records, the dates are recent, and the documents exist.

Source of Wealth is about you. How did you come to have 1.4 BTC in the first place? Not this transfer. The whole position, from the first euro.

That question reaches back to money that was never crypto: the salary you saved, the flat you sold, the business you exited. Then it follows that money forward through every platform and wallet it passed through, up to the balance sitting in front of the compliance officer today.

One question covers a day - one deal, one transfer. The other covers ten years.

Where tax fits

These two get confused constantly, so it is worth being exact. Your tax declaration and your source-of-wealth file answer different questions, and neither one substitutes for the other.

A bank receiving crypto proceeds needs three things to be true: that your data reconciles, that the origin of the money is explained and screened, and that the taxable profits were properly declared, because a bank is expected to help fight tax fraud too. The third is your tax return, and nobody else can supply it for you.

A tax report tells you what you owe. A Source of Wealth file tells a stranger where your wealth came from.

They are joined in one direction, and it is the direction that catches people out. Anti-money-laundering rules treat money that escaped tax the same way they treat the proceeds of any other crime. So an undeclared profit is not only a tax problem to be settled later with the tax office. It is a provenance problem, and it surfaces in front of the bank.

Which is also why the two pieces of work stay separate. A tax adviser does not reconstruct your wallets, and a provenance file does not tell you what you owe. Kept apart, each one protects the other.

See more about how tax and source of wealth work together.

What the officer is actually checking

That is what a bank which has handled crypto before will check, and in that order. A bank which has not may ask for all of it in a single sentence, or ask for the wrong thing entirely, and then the work of making the answer legible falls to you.

Four things, in this order.

Is there a consistent story? One or two pages that say when you first bought, with what money, on which platforms, what happened since, and what you now want to do.
Do the assets trace to you? Every address the money passed through has to be provably under your control, and the path from your first euro to your current balance has to hold together, movement by movement.
Do the story and the documents agree? This is where the system fails, and it is rarely because someone gave a bad answer. Your story has to be verified and quantified against independent data, and crypto data is distributed by nature, large in volume and diverse in form.
Has the money touched anything the screening flags? The bank, or the analytics provider behind it, will run your addresses against known sanctioned entities, mixers, darknet markets, stolen funds and high-risk platforms. That happens whether or not you provide anything, and it happens early.

A flag is not an accusation. The causes are usually ordinary: an exchange hacked after you used it, a privacy tool in 2019, a scam token airdropped to your wallet, or money you lost to a scam, which the chain records exactly like a payment to a criminal.

It comes down to who mentions it first. Name it yourself, with the date and what it was, and it is a paragraph. Let the screening find it while your file says nothing, and the officer is looking at an omission rather than a transaction.

A gap is not a detail. Refusing you is not the bank’s only option, and often not its main one: where it cannot explain the money, it is obliged to file a suspicious activity report. That obligation exists in essentially every country with a functioning banking system. The report goes to the national financial intelligence unit, it can open a law enforcement inquiry, and it is a mark on your name that you never see and cannot correct.

Which is the real argument for preparing before you walk in, rather than after they ask.

A worked contrast

Four checks stated like that are abstract, so here is what passing them looks like, on deliberately the simplest history there is. Anna transferred EUR 10,000 from her salary account to an exchange in March 2020, bought 1.4 BTC across two orders, withdrew it to a hardware wallet in June 2020, and has not moved it since. It is worth roughly EUR 130,000 today and she wants to sell 0.5 BTC for a house deposit.

Her Source of Funds answer is one page: the sale, the price, the withdrawal to her IBAN.

Her Source of Wealth answer is five:

what she holds today and what she is asking for: roughly EUR 130,000 in one hardware wallet, and the 0.5 BTC she wants to sell for a house deposit;
the EUR 10,000, and the salary statements from the eighteen months before it that show where the EUR 10,000 came from;
the two movements, bank to exchange and exchange to wallet, each matched on both sides, with the on-chain transaction showing 1.3998 BTC arriving after the network fee;
what she held and what it was worth at each purchase, each year end and today, from one named price source used consistently;
the plain statement that nothing was ever received from a third party, no staking, no mining, no airdrops.

The difference between EUR 10,000 and EUR 130,000 is price appreciation, and once the five pages exist, that sentence is provable rather than merely true.

Five pages, and every figure on them attached to a document.

Most histories are not Anna’s. Hers works because there are two movements and each has a document on both sides. Add a second exchange and a third wallet and you do not get a harder problem, you get dozens of the same one, because the evidence for a single story ends up scattered across places that do not reference each other. What grows is the number of joins. The shape of the answer does not change: five pages, and every figure on them still attached to something.

See it laid out: What goes in a source of wealth file, page by page

Your file is a claim, not a verdict

One thing worth being clear about before you build any of it. Everything you send is your account of events. It is a claim, and the officer’s job is not to read it and believe it. It is to test it against sources that did not come from you: the chain itself, the analytics provider, the bank’s own record of what actually arrived, sanctions and adverse media lists, and sometimes the exchange, asked directly.

You are drawing the treasure map. They still go on the treasure hunt.

Two things follow, and they change how you write.

A file works by being checkable, not by being convincing. Every claim should point at something a stranger can go and confirm without you in the room, which is why a transaction hash beats a screenshot, a named price source beats a number, and a consistently interconnected universe of addresses beats an assurance that the wallets are yours.

And sending it is not the end of the process. Expect questions, and expect them to be specific, because they come from someone who has been looking at your history from the other side with different tools. A file that anticipates the three obvious questions and answers them in advance often gets none.

Which brings it back to where it started. Two questions, not one. Where this money came from, and where your wealth came from. Almost every file that stalls is a file that answered the first and assumed the second had been covered.