When Source of Funds Gets Personal
The FCA recently issued large misconduct fines to two company officers and banned the two company directors from working in financial services. The CEO and former managing director were caught when attempting to acquire a UK bank and Reading Football Club. The FCA issued the fines and bans to Paul Taylor, former CEO of Blue Horizon Asset Management (BHAM) (£489,000), and Esmeralda Toni, managing director of the firm (£121,200). The case centers around the use of falsified financial documents and false claims about the ownership of a 200m euro bond portfolio. Both colluded in the illegitimate claims, with Ms Toni creating fake documents to back up Mr Taylor’s financial claims.
The Financial Conduct Authority (FCA) actions highlight the importance of legitimate, accurate checks when validating transactions and conducting source-of-funds checks.
Section 56 of the Financial Services and Markets Act 2000 (FSMA) featured heavily in the investigation, with Taylor and Toni both found to be “not a fit and proper person to perform functions in relation to a regulated activity.” Section 66 of FSMA’s “disciplinary powers” sets out the penalties for crimes of this nature.
Fines and bans from the FCA
Fines and bans are powerful tools for managing a sector that handles high-value transactions and sensitive financial data. In 2025, the FCA issued fines amounting to over £124 million (£124,221,367.45).
The highest fine, at over £44 million, was against Nationwide Building Society for “ineffective systems for keeping up-to-date due diligence and risk assessments for all its personal current account customers and for monitoring their transactions.” The FCA noted that Nationwide missed an opportunity to identify financial crime under its watch. A customer received 24 payments for Covid furlough loans totaling £27.3m over 13 months. An incredible £26.01m of this was deposited over just 8 days.
Monzo Bank received a fine of over £21 million from the FCA in 2025. The fine centered on the bank not keeping compliance in line with increasing customer numbers. Monzo was found to lack adequate customer verification. The FCA specified that “Monzo’s CDD procedures did not provide, as required by the MLRs, for verification of the identity of all beneficial owners and persons of significant control (“PSCs”).” The FCA found Monzo’s processes for identifying politically exposed persons (PEPs) and other anti-money laundering checks to be lacking.
What’s missing from source-of-funds compliance?
Massive fines such as those imposed on Nationwide and Monzo result from inadequate verification checks and due diligence. Fraudsters like Taylor and Toni exploit poorly implemented or missing AML and KYC checks. The problem stems from inflexible, out-of-date source-of-funds systems that facilitate exploitation and don’t let the financial services behind the checks adapt to the specific use case. Source-of-funds compliance is often not a straight path; checkboxes fail to capture the often complex nature of high-value fund transactions. Instead, entities involved in these transactions need tools fit for processes that may change with each transaction. Prescriptive services that can’t adapt let companies down. Intelligent orchestration that can make decisions based on incoming signals is the vanguard of source-of-funds and source-of-wealth checks.
Trust is a critical component of source-of-funds truth. But trust cannot be acquired simply by using verified credentials. The verifier is the trust key, and verifying the verifier is part of a trusted vouch-based SoF service. Trusted vouching is the pivot on which compliant source-of-funds checks turn.
Why automating source of funds checks ensures compliance
Source of funds is a process, not just a service. And notably, a SoF process may not be set in stone and may require multiple sources of verified information and validated documentation as the workflow progresses. In some cases, F2F validation may be required. Any entity that requires SoF or source-of-wealth checks must be able to modify its requirements on a per-transaction/per-user/use-case basis. This is where Source-of-funds orchestration that has decision-making capabilities excels.
Orchestration underpins the SoF workflow process, provisioning a trusted voucher that ensures all regulatory compliance requirements are met. The vouching entities themselves are verified according to regulations and the needs of the entity requiring the SoF checks. The voucher controls the workflow progression based on the requesting party’s needs. The individual (or business) going through the checks becomes part of the workflow, progressing through the SoF checks as each verification or validation is performed.
Most notably, the workflow can adapt to changing regulatory requirements, new forms of verification, new vouchers entering the service, and individual choices in line with compliance. The result is a smooth operation that applies the right level of verification at the right time and under the right conditions.
The FCA takes penalizing non-compliance with anti-money laundering regulations seriously. But it can be hard for companies to ensure they apply the right level of checks to thwart determined fraudsters. Verifying a voucher as a central party within a service adds a layer of trust to SoF checks that can mitigate exploitation by scammers, while keeping the workflow moving for legitimate companies and individuals.
To learn how verification orchestration can automate your SoF checks and maintain regulatory compliance, contact one of Avoco’s experts.
Source of Funds FAQs
Source of funds checks identify the source of a tranche or series of money for a specific transaction, such as a bank account, inheritance, etc.
What are source of funds checks used for?
Source of funds checks are part of money laundering compliance requirements. Source of funds is typically used to identify the source of a high-value transaction to ensure that it is legitimate and meets regulatory requirements and laws. Typically, organizations such as law firms, wealth management companies, and banks routinely use source of funds checks. Buying a house is an example of how source of funds helps mitigate the use of property to launder money.
How can a source of funds be identified?
Source of funds checks can be performed manually or digitally. For example, open banking allows an organization to check that funds are available but may not identify the source. Additional checks via a lawyer or wealth management company can help to identify fund origins.
What kind of other checks are performed when a source of funds check is carried out?
Other checks may be required when performing a source of funds check. For example, anti-money laundering regulations may require that certain levels or types of transactions require the individual to be verified using Know Your Customer (KYC) processes, which require document identification and credit file agency checks. Other checks may include PEP (politically exposed person) checks and other AML checks.
How does orchestration help in source of funds checks?
Orchestration provides the foundation to build multiple connections, flexibility, and automation into the SoF workflow. Source of funds orchestration allows industries to automate source of funds checks across many use cases. Orchestration also creates an intermediary, known as a ‘ Trusted Voucher,’ to help initiate and collate the different types of verification checks and vouch for individuals.