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Sources of funds analysis

Sources of funds analysis
When companies and individuals open bank accounts, carry out financial transactions, and resolve migration and business issues in foreign countries, they frequently receive requests for a report on the sources of funds prepared by an independent company.
Our Tenet team assists clients in preparing such reports. We issue reports on the origin of funds for clients based on the requirements of the compliance departments of banks, state authorities, and other foreign counterparties.
What we do
  • Identify sources of funds. Together with the Client we determine from which sources funds that are planned to be transferred to a new or existing account in a foreign bank were generated. We analyse income received from various sources, including operations with securities, the sale/lease of real estate, dividends, and remuneration and examine both simple and complex multi-jurisdictional transactions in all currencies, as well as payments in crypto.
  • Request supporting documents. Our team prepares an information request to the Client to provide documents confirming the nature of the analysed income. These may include purchase and sale agreements, dividend decisions, tax returns, and bank account statements.
  • Analyse the Client’s documents and data from external sources. The project team analyses the information provided by the Client and verifies it (where possible) via independent external sources, such as corporate registers, available corporate filings, and numerous others to increase the report’s credibility.
  • Prepare a report. Based on the analysis performed, Tenet issues a report on the origin of funds in a format agreed in advance with the Client and the bank/other end users.
Who requests reports?
  • banks
  • wealth management companies, investment firms, and family offices
  • state authorities
  • other counterparties
What drives requests?
The main factors driving such requests from foreign counterparties include:
  • increasingly stringent AML/CFT requirements
  • the residents of some countries (for example, Russia and the CIS) being perceived by most foreign banks, counterparties, and authorities to be clients from high-risk jurisdictions
  • a client conducting transactions with a high-risk jurisdiction or using high-risk products (in banks)
  • sanctions risks
  • reputational risks
Typical cases
Typical cases

Sources of funds analysis

The first case
The second case
The third case

Case description: A company conducting business abroad faces requests from banks, business partners and other counterparties to provide a report on the sources of funds of its chairman prepared by an independent professional firm, and prove he has no links to politically exposed persons (PEPs) in a certain high-risk jurisdiction.

Our response: We start with determination of sources from which the chairman’s funds were generated, requests all necessary supporting documents and then conduct the following steps to help the client:

  • Analyze the terms of the chairman’s employment contract with the client, including information on positions occupied, dates of employment, and remuneration;
  • Analyze inward payments in the existing bank accounts of the chairman, checking them for compliance with the terms of the employment contract;
  • Identify other sources of the chairman’s income in the period under review, examine documents provided by the client to confirm their legality, and verify (where possible) the client-provided information through external public sources to increase the report’s credibility;
  • Prepare the chairman’s business profile establishing the nature and geography of his business and professional interests.
  • Confirmation that neither sources of the chairman’s income, nor his business and professional interests were related to PEPs in high-risk jurisdictions durin the period under review.

Benefits to the client:

The report prepared by our team helps the client successfully pass all applicable AML/CFT procedures and open bank accounts, as well as facilitate relationships with other foreign counterparties.

Case description: An entrepreneur needs to provide a report confirming the legal origin of proceeds from the sale of his business when transferring funds to a foreign bank.

Our response: We conduct the following steps to help the client:

  • Request all supporting documents related to the sold business, including sale and purchase agreement, shareholder documents, etc.
  • Analyze the sale and purchase agreement related to the sold business entered into between the client and a third party;
  • Confirm the client’s historical ownership of the company and subsequent transfer of its shares to the buyer through an application to the official company register in the relevant jurisdiction.
  • Confirmation the client’s and the third party’s control over several crypto addresses used to conduct the transaction.
  • Examine transactions on the client’s crypto wallet via blockchain explorers to confirm their compliance with the terms of the sale and purchase agreements.

Benefits to the client:

The results of our work are used by the client to prove the legal origin to the bank and conduct a money transfer.

Case description: An entrepreneur in the field of real estate needs a report on the sources of her funds prepared by an independent professional firm in order to provide in to a migration authority when applying for foreign residency/citizenship.

Our response: We conduct the following steps to help the client:

  • Determine from which sources the client’s funds were formed and request necessary supporting documents;
  • Confirm the client’s ownership over several real estate properties through application to an official real estate registry;
  • Analyze all real estate lease / sublease agreements related to the properties entered into between the client and third parties;
  • Examine inward payments in the client’s bank accounts in order to check if the comply with terms of the analyzed agreements (in terms of amounts, dates and counterparties’ identities), as well as to identify other sources of the client’s income in the period under review.
  • Review supporting documents related to the other sources of income in order to assess the legality of their origin.

Benefits to the client:

The results of our work are disclosed to migration authorities in foreign jurisdictions in order to support the client’s application for residency/citizenship.