5 CPD
Course Description
Source of Funds (SoF) and Source of Wealth (SoW) are two distinct yet related concepts in the context of anti-money laundering (AML) and customer due diligence (CDD). Both are essential elements of a comprehensive due diligence process that helps obliged entities understand the origin of a customer’s money and wealth, which is crucial for assessing risk and detecting potential financial crimes such as money laundering, terrorist financing, or tax evasion.
The source of funds and the source of wealth are relevant to determining a client’s risk profile. Under the RBA, obliged entities should satisfy themselves that adequate information is available to assess a client’s source of funds and source of wealth as legitimate with a degree of certainty that is proportionate to the risk profile of the client.
In order to scrutinize source of funds (SoF) and source of wealth (SoW) it is important to understand the distinction between the terms. This course clearly and in details explains the terms source of funds and source of wealth and their difference.
The source of funds includes both the activity that generated the funds used in the business relationship, for example the customer’s salary, trading revenues, dividends, sales of a house, inheritance as well as the means through which the customer’s funds were transferred (e.g. the bank account from which they were transferred).
Understanding SoF is crucial to detect and prevent money laundering and terrorist financing. It helps obliged entities determine if the funds used in a transaction are consistent with the customer’s profile and declared economic activity
The source of wealth describes the activities that have generated the total net worth of a client (e.g. ownership of a business, inheritance, investments, etc). Customer SoW generally refers to a description of the economic, business and/or commercial activities that generated, or significantly contributed to, the customer’s overall net worth (assets minus liabilities), recognising that the composition of wealth generating activities may change over time, as new activities are identified and additional wealth is accumulated.
SoW helps obliged entities assess the legitimacy of a customer’s overall wealth and whether it aligns with their known profile and declared origin of their assets.
The obliged entity needs to be alert to any possibility that the funds may not be from a legitimate source or are not destined for a legitimate purpose. For example, when funds are sourced from a high-risk third country with inadequate AML/CFT legislation and regime, it is probably appropriate to obtain more information before proceeding with any transactions.
Red flags related to the source of funds (SoF) often indicate potential money laundering, fraud, terrorist financing, or other illicit financial activities. Red flags related to the source of wealth (SoW) refer to potential indicators of suspicious activities involving the origin or legitimacy of a customer’s accumulated wealth.
This course analyses the most common red flags associated with Source of Funds (SoF) and source of wealth (SoW).
This course also analyses 10 case studies relevant to SoF and SoW. It provides the scenario, then an analysis for SoF and SoW issues and finally the outcome (the action) of the financial institution based on the analysis. It also provides the steps for analysing similar scenarios and the takeaways for SoF and SoW.
In addition, this course analyses 5 case studies relevant to SoF and SoW which involve suspicious scenarios. It provides the suspicious scenario, then the red flags for each scenario, an analysis for SoF and SoW issues and finally the outcome (the action) of the financial institution based on the red flags and the analysis. It also provides the steps for analysing similar suspicious scenarios.
Topics covered
The course is split into the following sections:
Section 1: Source of Funds (SoF) and Source of Wealth (SoW)
- Understanding Source of Funds and Source of Wealth
- What is Source of Funds (SoF)?
- What is Source of Wealth (SoW)?
- Difference between source of funds (SoF) and source of wealth (SoW)
Section 2: Establishing Source of Funds and Source of Wealth
- Establishing Source of Funds
- Establishing Source of Wealth
- When should SoW be established?
- Establishing the source of wealth as part of EDD
- What SoF information is useful for decision-making?
- What SoW information is useful for decision-making?
- The importance of documenting SoF & SoW
- Source of Wealth and Source of Funds in Customer Risk Assessment
- How can Obliged Entities approach exceptional cases in which SoW/SoF standards are not met?
Section 3: Source of Funds and Source of Wealth Red Flags
- Source of funds Red Flags
- Source of Wealth Red Flags
Section 4: Source of Funds (SoF) and source of wealth (SoW) – Case Studies
- Case Study 1: High-Net-Worth Individual (HNWI)
- Case Study 2: Inheritance Wealth
- Case Study 3: Politically Exposed Person (PEP)
- Case Study 4: Suspicious Investment
- Case Study 5: Lottery Winnings
- Case Study 6: Real Estate Developer
- Case Study 7: Cryptocurrency Trader
- Case Study 8: Offshore Trust Account
- Case Study 9: Professional Athlete
- Case Study 10: Art Collector
- Detailed Steps for Analysis
- Key Takeaways for SoF and SoW Analysis
Section 5: Source of Funds (SoF) and source of wealth (SoW) – Case Studies (Suspicious scenarios)
- Case Study 1: Frequent Small Cash Deposits
- Case Study 2: Offshore Wire Transfers
- Case Study 3: Sale of Luxury Items
- Case Study 4: Charitable Donations as a Cover
- Case Study 5: Gambling Proceeds
- Key Steps in Suspicious Scenarios
- Identifying Red Flags
Course Duration:
This course may take up to 5 hours to be completed. However, actual study time differs as each learner uses their own training pace.
The course is addressed to:
This course is addressed to all individuals who practice Anti-Money Laundering or interested to learn or enhance their knowledge in Money Laundering such as:
- Compliance/AML Managers and staff in Banks, Investment Firms, Investment Funds, ASPs, Trust Service Corporate Providers, Accountants, Auditors and Lawyers.
- Employees of Banks, Investment Firms, Investment Funds, ASPs, Trust Service Corporate Providers, Accountants, Auditors, Law Firms and professionals who are involved or interested to learn or enhance their knowledge in Money Laundering.
- Executive Directors, Non-executive directors, Senior Managers, Compliance Officers, Risk Managers, Product Managers, Portfolio Managers, Investment Advisors, Dealers, Marketing Managers and in general employees of investment firms, funds, ASPs, Law firms, Accountants, Auditors.
- Internal Auditors
- Consultants
- Lawyers
It is also suitable to professionals pursuing CPD in Anti-Money Laundering for the renewal of CySEC Certificate (CySEC Basic or CySEC Advance Certificate or CySEC AML Certificate) or other relevant certificates in other jurisdictions.
Training Method
The course is offered fully online using a self-paced approach. The learning units consist of power point presentations. Learners may start, stop and resume their training at any time.
At the end of the course, participants take a Quiz to complete the course and earn a Certificate of Completion once the Quiz has been passed successfully.
Accreditation and CPD Recognition
The course can be accredited by regulators and other bodies for 5 CPD Units that require CPD training in Anti-Money Laundering. The course may be also approved for up to 5 CPD Units by institutions that approve general financial and AML training, such as the CySEC, ICPAC, CBA, CISI, ICA and ACAMS.
Eligibility criteria and CPD Units are verified directly by your association or other bodies in which you hold membership.
Registration and Access
To register to this course, click on the Take this course button to pay online and receive your access instantly. If you are purchasing this course on behalf of others, please be advised that you will need to create or use their personal profile before finalizing your payment.
Access to the course is valid for 90 days.
If you wish to receive an invoice instead of paying online, please Contact us by email. Talk to us for our special Corporate Group rates.
Instructor
George Papanicolaou has more than 20-years experience in the Financial industry. He worked for several years in managerial positions as area Manager, Head of Brokerage, Compliance Officer, Anti Money Laundering Officer, General Manager and Executive Director in Cypriot Investment Firms as well as Managing Director of GP GLOBAL LTD offering consulting services and training courses to Investment Firms, focuses in Internal Audit, compliance & AML issues. He offered numerous courses/seminars both in Cyprus and abroad in Investment Firms Law as well as in Compliance & Anti Money Laundering. George Papanicolaou is also a Chairman of a Nomination Committee in a company listed in the Oslo Stock Exchange.
George Papanicolaou holds a BSc in Electronic Engineering from the University of Texas at Austin (USA), an MBA with specialization in Finance from Leicester University (UK) and a Postgraduate Certificate in the Mechanics of Risk Management from Middlesex University (UK).
He also holds an ICA International Diploma in Anti Money Laundering from the International Compliance Association and the University of Manchester, as well as an Advance and Money Laundering certificate from the Cyprus Securities and Exchange Commission for the provision of investment services/activities.
He is a Member of the AML and Compliance Committee of the Institute of Certified Public Accountants of Cyprus (ICPAC), Fellow of the International Compliance Association (FICA), Mentor of ICA new students, member of the Cyprus Institute of Internal Auditors and the first Network chair for Cyprus of the International Compliance association.
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