A source of funds (SoF) report is a written, signed document that explains and proves where a specific amount of crypto came from and how it reached the account now sending money to a bank. It combines on-chain analysis of wallets and transactions with off-chain evidence such as exchange statements, bank statements, contracts and tax returns, so a compliance officer can check every step instead of relying on the client's word. Banks use it to complete the due diligence they owe under anti-money laundering law; it supports the bank's decision but does not replace it.
Why banks ask for it
Under the FATF Recommendations, which national anti-money laundering laws apply in most countries, banks must identify their client, establish the beneficial owner and understand the purpose of the relationship (Recommendation 10, customer due diligence). When a transaction looks unusual or the risk is higher, they apply enhanced checks, which include establishing the source of funds and often the source of wealth. Recommendation 15 extends these standards to virtual assets, and banks also screen every inflow against sanctions lists.
Crypto makes this harder: addresses are pseudonymous, funds can pass through many wallets and services, and a bank cannot read a blockchain explorer the way it reads a bank statement. A source of funds report translates the on-chain history into a documented, verifiable account.
What a report contains
Content varies with the case, but a solid report usually covers:
- Scope: the client, the amount, the assets, the wallets and exchange accounts concerned and the period analysed.
- Origin: how the crypto was acquired (purchase with fiat, mining, salary or payment received, inheritance, business income).
- Transaction trail: each step from the origin to the off-ramp, with transaction hashes, addresses, dates and amounts.
- Risk screening of counterparties for sanctions, mixers, darknet markets, scams and hacked funds.
- Reconciliation of amounts, fees, conversions and price changes, so the figures add up.
- Annexes: exchange statements, bank statements, contracts, tax returns and proof of wallet control.
- Method, data sources, limitations and the author's signature.
Who uses it
Private clients selling crypto and moving the proceeds to a bank, heirs who receive crypto, companies paid in crypto, and lawyers or trustees who need to justify assets. The same document is often reused for a tax authority, a notary or a second bank, which is why it should be self-contained and verifiable by a third party.
What it cannot do
A report cannot guarantee that a bank will accept the funds: each bank applies its own risk policy. It also cannot fill missing evidence with assumptions. Where records are lost, a serious report says so, explains what corroborates the account and lets the bank assess the residual risk.
How Advisorn helps
Advisorn Forensics prepares signed source of funds reports with verifiable annexes. We also answer the bank's follow-up questions so the file can be closed.
FATF Recommendations 10 and 15; FATF Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (2021)
Updated November 2026 · General information, not legal or tax advice on your specific case.