Fundamental to carrying out customer due diligence is understanding where a customer's money comes from in order to ensure that it hasn't come from illegal sources. A financial services provider must be able to explain both the customer's source of wealth or SOW and source of funds or SOF. Even seasoned bankers sometimes have difficulty explaining the difference between these two records, but it's really quite a simple distinction. Source of wealth or SOW documents how the customer's net worth was accumulated, including the period of time it took, and the business activities which generated the wealth.

For example, a potential new customer has accounts showing a net worth of 3.5 million US dollars, and the SOW documents that this amount has been accumulated from trading profitably in the used car business for the last 15 years. Notice that an SOW is not just a number, it is a number and a supporting narrative. Source of funds or SOF documents where the customer's deposit is coming from. Sticking with the example of our prospective new commercial customer, the SOF may record that the initial deposit will be transferred in from the customer's existing account with JP Morgan Chase. When client facing employees receive customer explanations for SOW and SOF corroboration is needed for high risk customers and additional supporting documents can be demanded for the corroboration. For example, the prospective customer could be asked for audited financial statements to confirm it has had a legitimate used car trading business for 15 years.