Source of wealth

Why it matters for PSPs and EMIs

For a business customer, the source-of-wealth question usually concerns its beneficial owners: how did the person who stands behind this merchant come to own it and fund it? The answer matters most when a beneficial owner is a politically exposed person, or when the scale of the business does not fit what is known about its owners.

What the law says

• Definition in guidance. EBA Guidelines EBA/GL/2021/02 (ML/TF risk factors), definitions in paragraph 12: "the origin of the customer's total wealth, for example inheritance or savings." The AMLR itself does not define the term.

• Politically exposed persons. AMLR Art. 42(1)(b): adequate measures to establish the source of wealth and source of funds involved in the relationship. The same applies to family members and close associates (Art. 46). For former PEPs, Art. 45 requires one or more of the enhanced measures in Art. 34(4) — which may include source-of-wealth information — for at least 12 months and for as long as the risk remains.

• Other higher-risk cases. AMLR Art. 34(4)(c): additional information on the source of funds and source of wealth of the customer and of the beneficial owners.

• Very large relationships. AMLR Art. 34(5): specific measures where a higher-risk relationship involves assets of at least EUR 5 000 000 for a customer holding total assets of at least EUR 50 000 000.

• How far to verify. EBA/GL/2021/02, paragraph 4.50: the measures depend on the degree of risk; where the risk of a PEP relationship is particularly high, verify on the basis of reliable and independent data, documents or information.

• International standard. FATF Recommendation 12 and the FATF Guidance on Politically Exposed Persons.