If you asked five Irish firms to explain the difference between source of funds and source of wealth, you would probably get five different answers. Yet the distinction sits at the heart of customer due diligence, and it becomes more important — not less — when Regulation (EU) 2024/1624 (AMLR) starts to apply on 10 July 2027.
Irish designated persons have been doing due diligence under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 for over fifteen years. Most files contain something labelled "source of funds." Far fewer contain a genuine source of wealth assessment — and fewer still show the reasoning that connects the two. This post explains the difference in plain English, when each applies, and how to evidence both properly before the new rulebook lands.
The two questions, in one sentence each
Source of funds asks: where is the money for this particular transaction or relationship actually coming from?
Source of wealth asks: how did this person come to have the overall wealth they hold?
They sound similar. They are not. Source of funds is narrow and transactional — the specific bank account, the specific sale proceeds, the specific gift funding the matter in front of you. Source of wealth is broad and biographical — the economic story of how the client accumulated their total assets over time: salary, business ownership, inheritance, investments, property disposals.
A useful mental test: source of funds answers "where did this money come from?"; source of wealth answers "why does this person have money at all?"
A hypothetical to make it concrete
Take a purely hypothetical example. A client instructs your firm on a property purchase and tells you the deposit is coming from their savings account with an Irish bank.
The bank account is not the source of funds — it is merely the channel. The source of funds question is what put the money into that account: was it accumulated salary, the proceeds of selling another property, a gift from a parent, a director's loan repaid by their company? Each of those answers points to different supporting evidence — payslips, a completion statement, a gift letter, company accounts.
Source of wealth is the wider picture. If the same client is a retired teacher funding a modest purchase, their employment history plausibly explains their wealth and the enquiry can be brief. If the client is 26, has no visible occupation and is funding a substantial purchase, the source of funds paperwork may be tidy while the source of wealth question — how does this person hold this much? — remains completely unanswered. That gap is exactly where risk hides.
When does each apply?
Both sit inside the risk-based approach. In practice:
- Source of funds is a routine part of customer due diligence wherever a transaction or relationship involves money moving — most obviously conveyancing, company formations, and client-account receipts. The depth of enquiry scales with risk.
- Source of wealth is primarily an enhanced due diligence measure. It comes into play for higher-risk relationships — politically exposed persons, higher-risk jurisdictions, unusual transaction patterns, or where the client's profile and their funds do not obviously fit together.
The AMLR sharpens this. It introduces enhanced due diligence for high-net-worth relationships — broadly, relationships where assets of €5 million or more are handled for a client whose total wealth is €50 million or more, with AMLA guidance on the €50 million test due by 10 July 2027. For firms serving wealthy clients, source of wealth analysis moves from an occasional judgement call to a structured, expected part of the file. The AMLR also lowers the general CDD threshold for occasional transactions to €10,000, and occasional cash transactions of €3,000 or more trigger limited CDD — so more transactions will pass through a due diligence gate in the first place.
What good evidence looks like
The most common file weakness is a note that says "source of funds: savings" with nothing behind it. A client's assertion is a starting point, not evidence. What you record should let a reviewer — or your supervisor, whether that is the PSRA, the Law Society of Ireland, a designated accountancy body such as Chartered Accountants Ireland, ACCA or CPA Ireland, the AMLCU, or the Central Bank of Ireland — follow your reasoning without asking you a single question.
| Claimed origin | Reasonable supporting evidence |
|---|---|
| Salary and savings | Payslips or employer confirmation, plus statements showing accumulation over time |
| Sale of a property | Contract or completion statement, solicitor confirmation of proceeds |
| Gift | Signed gift letter, plus enquiry into the donor's own source of funds where risk warrants it |
| Inheritance | Grant of probate or correspondence from the estate's solicitor |
| Business income | Financial statements, dividend vouchers, evidence of the trade itself |
For source of wealth, you are building a plausibility narrative rather than tracing a single payment: occupation and career history, business interests, known disposals, inherited wealth. The standard is not certainty. It is a documented, risk-proportionate judgement that the client's overall wealth is credible and consistent with what you know about them.
Three habits that keep files clean
- Separate the two questions on your forms. If your CDD template has one box labelled "source of funds/wealth," staff will answer one question and skip the other. Give each its own field, its own evidence list, and its own sign-off.
- Test consistency, not just existence. The point is not that a document exists — it is that the document, the client's profile and the transaction all tell the same story. Record the comparison, not just the collection.
- Escalate mismatches before proceeding. Where funds or wealth cannot be plausibly explained, that is a matter for your MLRO and potentially a Suspicious Transaction Report — filed in Ireland to FIU Ireland via goAML and to the Revenue Commissioners via ROS.
What to do now
- Audit a sample of recent client files: does each contain a distinct source of funds record, and — where risk required it — a source of wealth assessment?
- Update your CDD and EDD templates so the two questions are captured separately, each with prompts for supporting evidence.
- Refresh your Business-Wide Risk Assessment to identify which client types and services should routinely trigger source of wealth enquiries.
- Identify clients who may fall within the AMLR's high-net-worth enhanced due diligence measures, and plan how you will evidence the assessment.
- Brief your staff with worked examples — the savings-account scenario above is a good training exercise.
- Diary a review of AMLA guidance as it lands via amla.europa.eu, and re-check the position before 10 July 2027.
How CompliDesk helps
CompliDesk Ireland is being built AMLR-native, with client due diligence workflows that capture source of funds and source of wealth as separate, evidenced steps tied to your risk assessment. See the AMLR explainer for what else changes on 10 July 2027.
General information, not legal advice. This article provides general information about EU and Irish anti-money-laundering requirements. It is not legal, tax or compliance advice. Regulatory detail is still evolving through 2026–27 — verify against primary sources (EUR-Lex, AMLA, and your sector’s Irish supervisor) and seek qualified advice before acting.