A foreign customer claims as source of wealth the sale of inherited real estate. Which would be an appropriate next step in the verification process?

The most appropriate and standard next step is to obtain the sale contract for the inherited real estate. This document serves as direct, independent evidence to corroborate the customer's claim regarding their source of wealth (SoW). The contract provides crucial, verifiable details, including the property's identity, the sale price (which should align with the funds being deposited), the date of the transaction, and the parties involved. This aligns with the risk-based approach to Customer Due Diligence (CDD), which requires financial institutions to take reasonable and proportionate measures to verify the SoW for higher-risk customers, such as a foreign individual.

A. Obtain a bank reference letter: A bank reference letter is a general due diligence document that confirms a customer's relationship with another bank but does not verify the specific origin of wealth from a real estate sale.

B. Visit the inherited real estate to verity the existence: A physical visit to a foreign property is impractical, disproportionately expensive, and not a standard verification procedure. More efficient methods like reviewing land registry records exist.

C. No further evidence is required for inheritance: Accepting a significant SoW claim like inheritance without any corroborating evidence is a major failure in due diligence and would not satisfy regulatory AML/CFT requirements.

1. The Wolfsberg Group

"Frequently Asked Questions (FAQs) on Source of Wealth and Source of Funds" (June 2020). In the section "What are some examples of SoW information/documentation an FI might decide to collect and verify?"

the guidance explicitly lists for "Sale of property" the appropriate evidence as: "copy of the contract of sale

land registry records and publicly available information on the property." (p. 10). This directly supports obtaining the sale contract as a primary verification step.

2. ACAMS Certified Know Your Customer Associate (CKYCA) Study Guide

Chapter 3: Elements of a KYC Program. The guide emphasizes that for Enhanced Due Diligence (EDD)

which is applicable to higher-risk customers

an institution must take steps to verify the customer's source of wealth. This involves obtaining "documents and information to corroborate the SoW

" such as contracts

deeds

or official records

rather than relying on the customer's word alone or undertaking impractical measures.

3. Financial Action Task Force (FATF)

"Guidance for a Risk-Based Approach for the Banking Sector" (October 2014). Recommendation 10 requires financial institutions to conduct enhanced due diligence for higher-risk relationships. The interpretive note states this includes taking "reasonable measures to establish the source of wealth and source of funds." Reasonable measures are understood to be the collection and review of relevant documentation

such as legal contracts

to substantiate the customer's claims. (p. 16

57).