Source of funds in Spain: proof and defense

Expert advice on proving your source of funds: document dossier, bank traceability and defense before banks, notaries, the Tax Agency and SEPBLAC under Law 10/2010 and the AMLR.

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Record retention
10 years
Form 721 (Modelo 721) threshold
€50,000
Unjustified gain
LIRPF Art. 39
Enhanced due diligence (EDD)
Art. 11
Typical cases

When will you be asked to prove your source of funds?

Property purchases, account openings, large deposits, crypto proceeds or international transfers: each scenario requires specific documentation.

Real estate

Buying a home

“The notary and the bank require proof of where the purchase price comes from. We build a dossier with savings, income tax returns, a previous sale or an inheritance, all of it traceable.”

Inheritances and gifts

Wealth received from family

“Deed of acceptance, Form 650/651, cadastral value and traceability of the bequest: flawless documentation for banks and notaries.”

Crypto-assets

Profits on exchanges

“On-chain history, exchange statements and consistency with Form 721. Without this, getting your crypto proceeds into a bank account gets blocked.”

Business

Dividends and sale of a company

“Shareholders’ meeting, deed of sale, annual accounts and use of the sale price. A sound tax fit and a consistent narrative for any inspection.”

Consequences

Why you should not improvise your source of funds

An insufficient or inconsistent justification triggers enhanced due diligence (EDD), blocks transactions and may lead to a report to SEPBLAC or a Tax Agency review.

Bank block: the bank may withhold transfers or end the relationship if the source of funds documentation is not consistent with the customer’s profile.

Enhanced due diligence (EDD): Article 11 of Law 10/2010 requires enhanced measures for higher-risk transactions, with documentary proof of the source.

Report to SEPBLAC: any obliged entity may file a suspicious transaction report (STR) if the source is not reasonably proven.

Law 10/2010 · Art. 7 Legal obligation

Obliged entities must gather information on the purpose and origin of business relationships and transactions.

AEAT Unexplained increase

If the Tax Agency detects unexplained wealth, it is taxed as an unjustified gain (LIRPF Art. 39), with a penalty and possible interest.

Law 10/2010 up to €10,000,000

Very serious penalties for obliged entities that fail to apply due diligence measures on the source of funds correctly.

Are you being asked to prove your source of funds?

We help you build a solid, verifiable dossier that answers any obliged entity, tax authority or supervisor, in line with Law 10/2010 and the AMLR.

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Frequently asked questions

Source of funds: common questions

What does “source of funds” mean?

The source of funds is the lawful, verifiable origin of the money or assets used in a transaction: savings, salary, inheritance, gift, sale of a property, dividends, investment returns or crypto-asset profits.

Proving the source is not a formality: it is a legal obligation of obliged entities under Article 7 of Law 10/2010 on the prevention of money laundering and terrorist financing.

Who can ask me to prove my source of funds?

Any obliged entity under Article 2 of Law 10/2010: banks, payment and electronic money institutions, notaries, registrars, lawyers (in certain transactions), real estate agencies, asset managers, casinos, jewelers, antique dealers and crypto-asset service providers (CASPs).

Also the Tax Agency in tax reviews and inspections, and SEPBLAC in investigations.

What documentation is considered valid?

It depends on the claimed source. Common examples:

  • Savings: payslips, withholding certificates, personal income tax (IRPF) returns for recent years.
  • Sale of a property: deed of sale and proof of payment received.
  • Inheritance: death certificate, declaration of heirs, deed of acceptance of the inheritance and Form 650.
  • Gift: deed, Form 651 and traceability of the transfer.
  • Dividends: minutes of the shareholders’ meeting, bank receipt and tax record.
  • Crypto: exchange statements, transaction history and Form 721 where applicable.
What happens if I cannot prove the source?

The institution may refuse the transaction, block the account, request additional information (EDD) or file a suspicious transaction report with SEPBLAC.

On the tax side, the Tax Agency may assess the unexplained wealth as an unjustified capital gain (LIRPF Art. 39), with the resulting tax, interest and a possible penalty.

How do you prove the source of funds for crypto-assets?

By combining off-chain and on-chain documentation: exchange statements (KYC), transaction history, proof of the initial purchases in euros, wallet analysis and consistency with your tax returns (Form 721 if the value held abroad exceeds the threshold).

The narrative must be consistent with the customer’s profile and verifiable on the blockchain.

What is the difference between source of funds and source of wealth?

The source of funds (SoF) is the immediate origin of the money used in a specific transaction. The source of wealth (SoW) is the overall origin of the wealth built up over time.

In higher-risk transactions (EDD), institutions usually require both, especially where PEPs or higher-risk jurisdictions are involved.

What role does the new AMLR play?

Regulation (EU) 2024/1624 (AMLR) harmonizes due diligence obligations across the EU and raises the standards on customer identification, beneficial ownership and verification of the source of funds.

Its gradual application (fully enforceable from July 2027) tightens the criteria and unifies practice for banks, CASPs, notaries and real estate agencies.

How long do banks keep this information?

Obliged entities must keep due diligence records and the evidence of the source of funds for 10 years from the end of the business relationship or the execution of the transaction, under Article 25 of Law 10/2010.

That is why you should always keep a copy of the dossier you submit.

Practical guide

Practical guide: how to prove your source of funds

Proving your source of funds is not about handing over any piece of paper: it means building a documentary narrative that is consistent, traceable and proportionate to the risk profile. Here is the method.

Law 10/2010

What the law requires

Article 7 requires gathering information on the purpose and nature of business relationships. Article 11 imposes enhanced due diligence (EDD) where the risk is higher.

AMLR

A single EU framework

Regulation (EU) 2024/1624 harmonizes due diligence across the EU and specifies when verifying the source is mandatory.

FATF

International standard

FATF Recommendations 10 and 12 set the global standard on identification, beneficial ownership and source verification, especially for PEPs.

How to build a source of funds dossier in 10 steps

  1. Clearly identify the claimed source: savings, inheritance, property sale, gift, dividends, crypto or a combination.
  2. Gather the primary documents: deeds, tax returns, certificates, shareholders’ meeting minutes or tax settlements.
  3. Prove the bank traceability: complete statements showing how the funds came in, where they were held and how they were used.
  4. Reconcile the dates and amounts with the relevant personal income tax (IRPF), corporate income tax (IS) or Form 720/721 return.
  5. Check the consistency with the customer’s profile: age, profession, declared income and prior wealth.
  6. If there are crypto-assets, add the on-chain history, the exchange statements and the fiat↔crypto conversions.
  7. Write an explanatory memorandum that links each document to the narrative and provides context.
  8. Anticipate the critical questions the bank, notary or supervisor will ask (gaps, timing differences, conversions).
  9. Keep an organized copy of the dossier in case the issue comes up again in future transactions.
  10. Update it when new milestones occur (a sale, an inheritance, a significant transaction) so you never have to start from scratch.

If you need help preparing the dossier, see our anti-money laundering services or the external expert report.

How we handle source of funds

Source of funds: from “handing in a document” to a defensible dossier

A good source of funds justification is not improvised: it is designed as a file with documentary evidence, bank traceability and a consistent narrative. This is how we put it into practice.

Identifying the source of funds case by case1) Identification

Identify the real source

Before submitting anything, we define precisely what the claimed source is and what evidence actually exists to support it.

  • Initial interview
  • Document inventory
  • Profile analysis
Bank traceability of the source of funds2) Traceability

Build the bank traceability

We reconstruct the flow: how the funds came in, where they were held and how they were finally used, with statements and cross-references.

  • Bank statements
  • Clear timeline
  • Reconciliation with IRPF returns
Explanatory memorandum on the source of funds3) Narrative

Explanatory memorandum

A written memorandum that links each document to the transaction and anticipates the questions of the bank, notary or supervisor.

  • Clear structure
  • Documents linked
  • Objections anticipated
Source of funds for crypto-assets4) Crypto

Source of funds for crypto

We combine the on-chain history with the exchange’s KYC statements and your tax return (Form 721) to build a dossier that holds up even with particularly demanding banks.

Tip: exchanges disappear or lose data. Download your full history in CSV format regularly and store it with its hash.
Decision map: which documents to provideQuick map

Which documents, by source?

Savings / salary

Income tax returns (IRPF) for several years, payslips and a consolidated bank statement.

Inheritance / gift

Deed, Form 650/651, death certificate and traceability of the bequest.

Crypto / investment

KYC statements, on-chain history, Form 721 and tax reconciliation.

Playbook

Source of funds: what is expected and what evidence is required

Claimed source
What must be shown
Typical evidence

Savings / salary

Gradual build-up of capital, consistent with the income declared in recent years.

Five years of income tax returns (IRPF), payslips, bank statements and withholding certificate.

Sale of a property

A genuine property transfer, with proven receipt of payment and correct tax reporting.

Deed of sale, proof of payment, income tax return (IRPF) and transfer tax (ITP/AJD).

Inheritance

Acquisition on death (mortis causa), formalized and with the tax settled.

Death certificate, declaration of heirs, deed and Form 650.

Gift

A gift formalized and declared under the applicable regional rules.

Deed of gift, Form 651 and bank traceability of the amount.

Crypto / investment

A documented and declared capital gain, with on-chain traceability.

Exchange KYC statements, transaction history, income tax return (IRPF) and Form 721.

Typical red flags when proving the source

Patterns that lead the obliged entity to apply enhanced due diligence or report to SEPBLAC.

  • Inconsistency between the wealth provided and the income declared in income tax (IRPF) returns.
  • Partial or incomplete documentation, or no bank traceability.
  • Cash transactions split just below the threshold (structuring).
  • Funds originating in higher-risk jurisdictions or in countries without equivalent AML systems.
  • A fiat↔crypto jump with no exchange statements, or no Form 721 where one was required.
Glossary

Key source of funds terms

If you are facing a source of funds request, these terms will appear in letters, notices and procedures. Understanding them helps you respond with sound judgment.

SoFSource of Funds

Source of funds (origen de fondos)

Immediate origin of the money used in a specific transaction (purchase, deposit, transfer, investment).

Evidence: document + bank traceability.
SoWSource of Wealth

Source of wealth (origen del patrimonio)

Overall origin of the wealth the customer has built up over time, not only of the funds in a one-off transaction.

Common with PEPs and EDD.
EDDArt. 11 Law 10/2010

Enhanced due diligence

Additional verification measures applied where the risk is higher: PEPs, high-risk jurisdictions or opaque products.

Requires stronger proof of the source.
PEPExposed Person

Politically exposed person

Holders of prominent public functions, their family members and close associates. Their involvement triggers enhanced due diligence and proof of the source of wealth.

Lists: BOE, FATF, EU sanctions.
SEPBLACSupervisor

Executive Service of the Commission

Spain’s anti-money laundering authority. It receives suspicious transaction reports and supervises obliged entities.

A report does not imply guilt.
AMLREU 2024/1624

Single EU regulation

A directly applicable regulation that harmonizes due diligence across the EU, including verification of the source of funds.

Full application: July 2027.
LIRPF Art. 39Tax

Unjustified capital gain

Wealth whose origin is not proven is treated as taxable income. It is taxed at the marginal rate and may lead to penalties and surcharges.

Interacts with the tax statute of limitations.
Form 720Reporting

Assets and rights held abroad

Informational return on accounts, securities and assets held outside Spain. Filing it correctly strengthens the traceability of your wealth.

After the CJEU ruling: penalties recalibrated.
Form 721Crypto

Crypto held abroad

Specific informational return on virtual currencies held in custody abroad, key to proving the source of crypto proceeds.

Threshold: €50,000 per resident.
Free resource · PDF

Download the 10-Step Source of Funds Checklist

The method for building a solid, defensible source of funds dossier: which documents to provide in each case, how to reconcile the bank traceability and what evidence is required in each scenario.

  • The 10 steps to prove your source of funds
  • Documents by type of source (inheritance, savings, crypto, sale)
  • References to Law 10/2010, the AMLR and the FATF
  • Professional PDF · 7 pages

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Legal framework for source of funds: Law 10/2010, the AMLR and the FATF

The obligation to prove and verify the source of funds has a clear legal basis in Spain and the European Union. Law 10/2010 of April 28 on the prevention of money laundering and terrorist financing, together with its implementing regulation (Royal Decree 304/2014), requires obliged entities to gather information on the purpose and nature of the business relationship, as well as on the origin of the funds used.

Obligations of obliged entities

Article 7 of Law 10/2010 requires due diligence measures to be applied as a general rule; Article 11 introduces enhanced due diligence (EDD) in higher-risk situations, such as transactions with politically exposed persons (PEPs), higher-risk jurisdictions or opaque products. In those cases, verifying the source of funds is mandatory and must be documented.

The AMLR: EU harmonization

Regulation (EU) 2024/1624 (AMLR), together with Directive (EU) 2024/1640 and the Regulation establishing AMLA (the EU Anti-Money Laundering Authority), is the biggest change in AML in decades. It sets uniform standards for identifying the beneficial owner, verifying the source of funds and applying enhanced measures in high-risk transactions. Its full application is scheduled for July 2027.

International standards: the FATF

The FATF Recommendations, especially Recommendation 10 (customer due diligence) and Recommendation 12 (PEPs), are the international standard. Spain is evaluated periodically by the FATF, and the criteria for verifying the source of funds are aligned with its recommendations.

Source of funds and taxation

Article 39 of the Personal Income Tax Law (LIRPF) treats as an unjustified capital gain any wealth whose ownership, declaration or acquisition does not match the income or wealth declared. That is why consistency between the AML dossier and your tax history (IRPF, IS, Form 720 and Form 721) is essential to avoid tax adjustments.

Supervision: SEPBLAC, the Bank of Spain and the AEAT

SEPBLAC supervises compliance by obliged entities and receives suspicious transaction reports. The Bank of Spain and the CNMV are involved in sector supervision, while the AEAT (Spanish Tax Agency) examines the origin of wealth from a tax perspective. A good dossier must withstand all of these approaches.

Law 10/2010 Royal Decree 304/2014 AMLR 2024/1624 FATF/GAFI SEPBLAC LIRPF Art. 39 Form 720 Form 721

Source of funds services

Crypto source of funds → Defense against bank blocks → Traceability report → External expert report → Tax Agency and SEPBLAC requests → AML/CFT audit →

Related areas

Anti-money laundering (AML/CFT) → Crypto-assets and blockchain → Form 721 for crypto → Corporate compliance → Fintech regulation → Securities market regulation →

Resources and blog

Blog: AML, source of funds and compliance → Money laundering and crypto-assets → Crypto-assets and cryptocurrencies →

Official sources

Key legislation, linked to the official text:

Legislation and links reviewed in .

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