Proof of Funds (PoF)

🔹 Definition

Proof of Funds (PoF) refers to a verifiable document or statement that demonstrates an individual’s or entity’s financial capacity to complete a transaction, such as making an investment, purchasing property, or meeting capital requirements for immigration or regulatory purposes.

In compliance and risk management contexts, PoF is often used to support Customer Due Diligence (CDD), Source of Wealth (SoW), and Anti-Money Laundering (AML) reviews.

🔹 Frequently Asked Questions (FAQs)

Q1: What documents are commonly accepted as Proof of Funds?

• Bank statements (typically from the past 3–6 months)
• Fixed deposit or savings account confirmations
• Securities account summaries (stocks, mutual funds)
• Escrow account letters
• Audited financial statements for businesses
• Loan sanction letters (if applicable to the transaction)

Q2: When is Proof of Funds required?

• Real estate purchases or property rentals
• Visa or immigration applications, especially investor and entrepreneur categories
• Company incorporations requiring minimum paid-up capital
• Large-scale investments, mergers, or acquisitions
• As part of enhanced due diligence in high-value or high-risk transactions

Q3: How is PoF evaluated for compliance purposes?

• Amount must be sufficient, accessible, and under the client’s legal control
• Must originate from a legitimate and traceable source
• Documents must be authentic, recent, and issued by a reputable institution
• May be cross-referenced with Source of Funds (SoF) and Source of Wealth (SoW) documentation

Q4: What are the risks associated with PoF in AML/CFT?

• Forged or altered documents submitted to pass compliance
• Use of third-party or layered accounts to obscure ownership
• Rapid, unexplained inflows of large funds without a clear economic purpose
• Circular transactions or shell companies used to fabricate fund legitimacy
• Failing to verify PoF may expose institutions to regulatory penalties or criminal facilitation

Q5: Are digital or foreign PoF documents accepted?
Yes, but with additional scrutiny:

• Digital bank statements are often accepted if downloaded from official platforms
• Foreign PoF documents may require certified translations, notarization, or apostilles
• Risk-based policies may require additional verification steps, such as contacting the issuing bank or using third-party validation tools