Definition
Source of funds means the origin of the specific money used in a particular transaction or business relationship — which account it comes from, and what activity generated it, such as salary, a property sale or a company distribution. It is distinct from source of wealth, which concerns how a client accumulated their overall assets, and it is a core element of enhanced due diligence.
What it is
Source of funds answers a narrow, concrete question: where did the money for this transaction actually come from? Not the client's life story — the specific funds. That means identifying the account or arrangement the money is drawn from and the activity that generated it: employment income, the proceeds of a property sale, an inheritance, a dividend, a loan.
It is worth keeping the sibling concept straight. Source of wealth looks at how the client built their overall asset position over time; source of funds looks at the money on the table now. A client can have an entirely legitimate source of wealth and still present a source-of-funds problem on one transaction — funds arriving from an unexpected third party being the classic example.
Why it matters for Irish firms
For Irish designated persons, source of funds is where suspicion most often crystallises. A purchaser in a conveyance, a new accountancy client settling a large fee, a company formation funded from an unexplained account — in each case the practical questions are the same: does the explanation make sense, does the documentation support it, and does the money actually arrive from where the client said it would? When the answers do not line up, that assessment is what feeds the MLRO's decision on whether a Suspicious Transaction Report is required — filed in Ireland with both FIU Ireland via goAML and Revenue via ROS.
The evidential discipline matters as much as the enquiry itself: record what was asked, what was provided, and the reasoning either way.
What changes under the AMLR
From 10 July 2027, Regulation (EU) 2024/1624 (AMLR) sharpens the context in which source-of-funds checks operate: CDD applies to occasional transactions from €10,000, occasional cash transactions of €3,000 or more trigger limited CDD, a €10,000 cash cap applies to commercial transactions, and enhanced due diligence — where source-of-funds scrutiny does its heaviest work — is prescribed for defined higher-risk situations, including certain high-net-worth relationships.
How CompliDesk helps
CompliDesk Ireland captures source-of-funds enquiries, documents and reasoning inside each client file, ready for supervisor inspection — book a demo to see it in practice.
General information, not legal advice. This definition provides general information about EU and Irish anti-money-laundering requirements. 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.