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What is a Source of Funds check, and why is it important?

Think of Source of Funds (SOF) like a money check-up. When you put money in or take it out of your account, we just want to make sure it's all good and coming from the right places. It's like making sure your money is on its best behaviour and not mixed up in anything shady. So, while it might seem like a bit of a hassle, it's just a way to keep everything safe and sound for everyone involved!

 

Source of Funds (SOF) can come from all sorts of places, like your pay check, money you make from your business, or even a loan from the bank. It's basically where your money comes from before it ends up in your account. A few examples would be - 

  1. Salary: The money you get paid from your job.
  2. Business Profits: Money your business makes after paying expenses.
  3. Investment Returns: Profits you earn from investments like stocks or real estate.
  4. Gifts or Inheritance: Money given to you as a gift or passed down from family.
  5. Loan Proceeds: Money you borrow from a bank or lender.
  6. Savings: Money you've saved up over time.
  7. Selling Assets: Money you get from selling things you own, like a car or jewellery.
 
Source of Funds is important for both parties for a number of reasons - 
  1. Preventing Bad Stuff: Checking where money comes from helps stop fraud and illegal activities, like money laundering.
  2. Following the Rules: It's required by law for banks to know where your money is from. This helps them follow rules meant to keep banking safe and fair.
  3. Keeping You Safe: Checking the source of funds protects you from shady deals and keeps your money safe from being used for bad stuff.
  4. Building Trust: It makes sure everyone plays fair and keeps the financial system trustworthy.
  5. Managing Risk: Knowing where money comes from helps banks understand the risks involved in different transactions.
     
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