What Is Source of Wealth?

Source of Wealth (SoW) refers to the origin of the funds a client is using in a transaction. It is distinct from Source of Funds — the specific account or mechanism from which funds are transferred — though the two concepts are related and are often assessed together in practice.

For a source of wealth check Australia conveyancers context, the question is not simply "where did this money come from?" in a mechanistic sense. The question is: does the client's financial profile — their occupation, business activities, known income, and financial history — coherently explain the level of wealth they are bringing to this transaction? A retired schoolteacher purchasing a $4 million property with cash requires more explanation than a property developer of the same age doing the same thing.

SoW is not a binary pass/fail test. It is a proportionate risk assessment. Low-risk transactions with straightforward explanations require proportionate documentation. High-risk transactions — large cash components, unusual structures, clients from high-risk jurisdictions, or clients whose declared income does not obviously support the transaction — require more intensive investigation and more detailed documentation.

The obligation to conduct SoW checks is triggered by the nature of the designated service, not by the size of the transaction. Every property settlement is a designated service. The intensity of the SoW assessment should scale with the risk indicators present, but the obligation to conduct and document at least a baseline assessment applies across the board.

Why Conveyancers Must Now Conduct SoW Checks

Under the Tranche 2 reforms to the AML/CTF Act, conveyancers became reporting entities from July 1, 2026. This brings them within the full scope of the AML/CTF regulatory framework — including the obligation to conduct customer due diligence, which encompasses Source of Wealth assessment as a component of enhanced due diligence for higher-risk clients.

The policy rationale is straightforward. Property transactions have consistently been identified by AUSTRAC and by international bodies including the Financial Action Task Force (FATF) as one of the highest-risk channels for money laundering in Australia. The anonymity of beneficial ownership in some property structures, combined with the large transaction values and the role of professional intermediaries, makes property settlement a natural target for criminal proceeds.

Conveyancers are at the centre of that process. They control the final mechanics of settlement. They interact directly with clients and with the funds being transferred. They are positioned to identify warning signs that a bank or real estate agent may not see — discrepancies in the stated source of funds, unexplained wealth, or structures that do not make commercial sense.

Regulatory obligation aside, there is also a professional liability dimension. A conveyancer who facilitates a transaction that is subsequently found to involve money laundering — and who cannot demonstrate that they conducted appropriate due diligence — may face professional disciplinary proceedings in addition to AUSTRAC regulatory action. The SoW check is both a regulatory requirement and a professional protection.

What Evidence Is Acceptable for Source of Wealth?

AUSTRAC does not prescribe a fixed list of acceptable SoW evidence, because the appropriate evidence depends on the client's circumstances and the nature of the transaction. The standard is whether the evidence you obtain is reasonably capable of explaining the client's wealth to the level the risk profile demands.

For most residential conveyancing clients, the following categories of evidence are commonly accepted as part of a proportionate SoW assessment: bank statements showing accumulated savings over time (typically 3-6 months for lower-risk clients, 12 months for higher-risk profiles); payslips or employment contracts confirming income at a level consistent with the accumulated savings; a formal letter from an employer confirming salary; evidence of property sale proceeds (a settlement statement or contract of sale from a prior transaction); evidence of inheritance (a Grant of Probate, executor's certificate, or solicitor's letter); or evidence of a business sale (a contract of sale and settlement statement for the business).

For higher-risk clients — including those using complex entity structures, those whose declared income does not obviously explain their wealth, or those from jurisdictions that AUSTRAC has designated as high-risk — more detailed evidence is appropriate. This may include accountant-prepared financial statements, tax returns, or a formal letter from an accountant or solicitor attesting to the client's financial position.

What is not acceptable is relying on the client's unverified self-declaration without any supporting documentation. "Client says funds are from savings" is not a SoW check. It is a note of what the client said, which may be relevant context but is not evidence.

Bank Statement Red Flags Conveyancers Must Know

Bank statements are the most commonly used SoW document in property transactions, and they contain the most information — which means they require careful review, not a cursory glance.

The most fundamental check is the mathematical tie-out: opening balance plus total deposits minus total withdrawals must equal the closing balance. If the arithmetic does not reconcile, the statement may have been altered. This is not a task that requires forensic accounting skills — it is basic arithmetic that any member of staff can perform. Tranche's SoW analysis engine performs this check automatically for every statement uploaded, flagging any discrepancy however small.

Lump-sum deposits of $10,000 or more require particular attention. Under the AML/CTF Act, cash transactions of $10,000 or above trigger mandatory Threshold Transaction Reporting obligations. But even for non-cash deposits, a large lump sum appearing in a bank statement without an obvious corresponding explanation — a prior property sale, a business distribution, or a documented inheritance — is a significant red flag. The source of that specific deposit must be explained and documented separately.

PDF tampering is a growing concern. Fraudulent bank statements can be created using image editing software, PDF manipulation tools, or online services that generate realistic-looking documents. Metadata red flags include a creator tool that is an image editor (Photoshop, GIMP, Canva), a modification date that is significantly later than the creation date, or completely missing metadata — which is unusual for genuine bank-generated PDFs that are created programmatically. A statement that has been printed and rescanned to destroy metadata is itself suspicious.

Other red flags include: round-number transactions that appear regularly and have no obvious commercial explanation; transactions just below reporting thresholds ($9,900 or $9,950 regularly appearing); counterparties in high-risk jurisdictions; and a transaction pattern that is completely inconsistent with the client's declared occupation and income.

How to Document SoW Findings

Documentation is where many firms fall short, even when they have conducted a thorough SoW assessment. The obligation is not merely to conduct the check — it is to create and retain a record that demonstrates you conducted the check, what you found, what conclusions you drew, and why you proceeded (or declined) the engagement.

At a minimum, your SoW record should contain: the client's name and matter reference; the date of the assessment; the category of evidence obtained (e.g. "6 months bank statements, January–June 2026"); a summary of the key findings (consistent savings pattern, no unexplained lump sums, mathematical reconciliation confirmed); any risk flags identified and how they were resolved; the conclusion (acceptable / further investigation required / declined); and the name of the staff member who conducted the assessment.

For higher-risk clients, the record should be more detailed — capturing the specific questions asked of the client, the specific documents obtained, and the reasoning behind any elevated-risk decisions. Where a matter is borderline and proceeded on the basis of senior staff review or management authorisation, that authorisation must be recorded.

Records must be retained for seven years from the date of the transaction or the end of the customer relationship, whichever is later. That means structured file storage — not just a note in the conveyancing file that may be purged on the firm's standard six-year file retention cycle. Your SoW records require a separate, explicitly managed retention schedule.

How Tranche Automates the Analysis

Tranche's Source of Wealth analysis tool is designed for the practical reality of a busy conveyancing practice: staff who are not forensic accountants but who need to produce a defensible, documented SoW assessment quickly.

The process is: upload a PDF bank statement directly through the Tranche platform. The system reads the statement using AWS Textract's table analysis capability, which reliably identifies debit and credit columns without requiring manual data entry. It then performs the mathematical tie-out automatically — checking whether the opening balance, deposits, withdrawals, and closing balance reconcile within the two-cent tolerance that accounts for legitimate rounding differences in bank-generated statements.

Lump-sum deposits of $10,000 or more are automatically flagged with their date, amount, and counterparty information. The system audits the PDF's metadata, checking the creator tool, creation date, modification date, and PDF version for indicators of manipulation.

The output is a structured SoW analysis report — exportable as a PDF — that documents all of these checks with timestamps. The report is designed to function as a compliance artefact: if AUSTRAC or a professional disciplinary body asks for evidence that you conducted a SoW review, the Tranche report provides that evidence in a structured, professional format. The report is stored in your Tranche account and can be retrieved by matter reference at any time within the seven-year retention period.