In-depth guide · Compliance
Evidencing source of wealth: the evidence matrix
Updated: · Leutrim Miftaraj, FLIORE · Editorial standards · Other languages: Deutsch · Français · Español
Short answer
The source of wealth is evidenced with different documents depending on where it comes from: salary and tax records for earned income, the purchase agreement and receipt of payment for the sale of a business, the certificate of inheritance and partition agreement for an inheritance, exchange and wallet statements for crypto assets. What matters is not the number of documents but a derivation showing how the evidence explains today's wealth.
Source of wealth and source of funds
Two questions are often mixed up. The source of wealth explains how a person's entire wealth came about – over decades. The source of funds explains where the specific assets that are brought into a business relationship or transferred come from. Where risk is higher, the anti-money laundering rules in Switzerland, Germany and Austria require both – and checked for plausibility, not just asked about.
The matrix
| Source | Primary evidence | Supplementary evidence | Plausibility check |
|---|---|---|---|
| Earned income | Salary statements, tax assessments | Employment contracts, bonus confirmations | Income over the years in relation to the wealth |
| Sale of a business | Purchase agreement, closing confirmation, receipt of payment | Commercial register extracts, press reports, valuation | Price, share, taxes and date are consistent |
| Dividends from the family company | Minutes of shareholders' meetings, annual accounts | Tax certificates | Distributions match the earnings |
| Inheritance | Certificate of inheritance, partition agreement | Estate inventory, inheritance tax assessment | Share of the estate matches the inflow |
| Gift | Deed of gift, bank record | Gift notification, tax assessment | The donor's own source is explainable |
| Sale of real estate | Purchase agreement, land register extract | Notary's statement, mortgage redemption | Net proceeds after mortgage and taxes |
| Investment income | Portfolio and income statements over several years | Performance reports | Return within market norms |
| Crypto assets | Exchange statements, wallet addresses | Analysis of transaction history, tax records | Purchase dates and prices explain the value |
Writing the derivation
A good derivation fits on one page. It starts with today's wealth, names the main sources in chronological order with amounts and refers to the evidence. It explains gaps openly instead of skipping them: "Tax records for the years 1990 to 2000 are no longer available; the wealth stems from founding company X, evidenced by the commercial register entry and press reports." Auditors accept gaps more readily than contradictions.
For old family wealth built up over generations, a plausible, independently supported account is often sufficient: company history, register extracts, earlier tax assessments, confirmations from long-standing advisers. What matters is that the account does not rest solely on the family's own statements.
Requirements for the evidence
- Legible, complete and dated; for documents in other languages, a translation of the essential parts.
- Where risk is higher, originals or certified copies wherever possible, or documents obtained directly from authorities or banks.
- Link to the person: name, date and amount must fit the derivation.
- Independence: third-party evidence carries more weight than self-prepared statements.
- Filing in the KYC file with a reference from the derivation.
Worked example (simplified)
An entrepreneur brings 12 million Swiss francs into a new structure. The derivation: in 2018, sale of 60 per cent of her software company for 18 million, evidenced by the purchase agreement, closing confirmation and receipt of payment; after taxes and a gift to her children, around 14 million remained; since then investment income according to portfolio statements. The 12 million come from her portfolio at a Swiss bank, evidenced by the transfer order. The source of funds is thus as clear as the source of wealth – on one page, with six enclosures.
Building audit-proof documentation
- Ask the family about the sources and put rough figures on them.
- Request the primary evidence for each source; supplementary evidence only where needed.
- Write the derivation: current position, sources, amounts, references to evidence, gaps.
- Check plausibility: do amounts, dates and taxes fit together?
- Assess the result; for high risk, have a second person confirm it.
- For new inflows, add the source of funds instead of rewriting the derivation.
Special situations
Some situations require particular attention. For wealth from countries with a high corruption risk or from business close to the state, formal evidence is often not enough; here it must be clarified how contracts, licences or participations came about. For crypto assets from the early years, exchange statements are sometimes missing because platforms no longer exist; the public transaction history of the wallets, earlier tax returns and confirmations from advisers can then help.
For inheritances from abroad, foreign estate documents and their translation are needed; for gifts within the family, the source at the donor's end. For wealth financed through loans, the ability to repay is part of the plausibility. In all these cases: where the source cannot be convincingly clarified, the relationship is not accepted or the reporting obligation is examined – a convenient assumption does not replace a clarification.
In FLIORE
FLIORE stores evidence encrypted and with versions on the mandate, assigns it to persons and records the assessment in the audit trail. The KYC package compiles the derivation and its enclosures, with an index of enclosures, for banks or audits.
At a glance
| Source of wealth | How the entire wealth came about |
|---|---|
| Source of funds | Where the specific assets brought in come from |
| Core | A one-page derivation with references to evidence |
Terms on this page
- Source of wealth
- How a person's total wealth came about, for example through entrepreneurship, inheritance or employment.
- Source of funds
- The origin of the specific assets brought into a business relationship or transaction.
- Audit trail
- An unalterable log that records who created, changed, approved or deleted which data and when.
Frequently asked questions
Is a self-declaration by the family enough?
For low risk it can be; for higher risk it is not. The information must then be checked for plausibility with evidence, preferably from independent sources.
What if old evidence is missing?
Name the gap openly and support it with independent sources, such as register extracts, press reports or confirmations from long-standing advisers.
Do documents have to be translated?
The essential parts should be available in a language that the family office and an audit firm understand. For high risk, a certified translation is advisable.
How are crypto assets evidenced?
With exchange statements, the wallet addresses and a traceable transaction history from purchase to today, supplemented by tax records.
How often must the derivation be updated?
With significant new inflows and as part of the periodic review. The existing derivation is extended, not replaced.
Does this also apply to gifts within the family?
Yes. For the recipient, the gift is the source; where risk is higher, the source at the donor's end must also be explained.
How is wealth from high-risk countries handled?
With enhanced clarifications: how did contracts, licences or participations come about, are there links to politically exposed persons, and can the information be confirmed independently? Formal evidence alone is often not enough here.
What is the difference between evidence and a plausibility check?
Evidence is a document, such as a purchase agreement. The plausibility check is the assessment of whether the evidence as a whole conclusively explains the wealth – amounts, dates and taxes must fit together. Only both together fulfil the due diligence obligation.
Sources
- Swiss Anti-Money Laundering Act (AMLA/GwG, SR 955.0) – Fedlex
- German Money Laundering Act (GwG), section 15 – Enhanced due diligence obligations
- Austrian Financial Markets Anti-Money Laundering Act (FM-GwG) – Legal Information System (RIS)
- FATF Recommendations and Guidance on Beneficial Ownership
- FINMA – Anti-Money Laundering Ordinance FINMA (AMLO-FINMA)
This page provides orientation and does not replace legal or tax advice. The cited legal sources in their applicable version are authoritative.
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