When the bank asks you to explain the money
A transaction can make perfect sense to the person who carried it out and still be difficult for someone else to reconstruct. The seller remembers the agreement, the instalments and the outstanding balance. The person reviewing the documents sees a contract, several payments and names that may not immediately match. There is a practical task between those two perspectives: explaining how the facts fit together.
When a bank asks for evidence of the source of funds, the useful question is what it needs to understand about that transaction. Answering takes more than finding a transfer receipt. The receipt shows a movement of money; on its own, it may leave the reason for receiving it unexplained.
Customer due diligence is part of the banking framework. FATF Recommendation 10 addresses whether transactions are consistent with what an institution knows about its customer, including, where necessary, the source of funds. A document request alone does not establish that there is a suspicion. FATF, Recommendation 10.
A local documentary reference is the original text of SEPRELAD Resolution 70/2019: Article 29 linked a customer's transaction profile to their activity, transactions and supporting evidence. The document addressed banks and finance companies supervised by the BCP's Superintendency of Banks; it did not prescribe a single file for every institution or country. For a current application, confirm the applicable requirements and rules with the institution. SEPRELAD, original 2019 text, Article 29.
The practical decision comes before attaching any files: establish which money you are explaining. It could be a particular payment, a transfer of savings or income over a period. If the question concerns a specific credit, a general account of your working life may provide context while leaving that credit unexplained. State the amount, currency, date and purpose clearly in the response.
Imagine a property sale, unrelated to any actual case. The parties agree on a deposit and two instalments. The contract records the full price; the statement shows only the final instalment. If both are submitted without a note, the reviewer must work out why the figures differ. A short explanation can identify the contract, show which instalment the credit represents and locate the earlier payments. The relevant documents will depend on the institution's request and on how the transaction was arranged.
This reveals a simple difference between having records and being able to use them. A document helps when it supports a specific statement. The contract may explain the agreement; the bank record, the receipt of payment. Neither should be treated as proving more than it does. A tax return may provide information about the period it covers without necessarily explaining each subsequent payment on its own.
An introductory page can make the file easier to read. Who received the money, what generated it, when it happened and which documents allow the reviewer to follow it. Each statement should lead to identifiable evidence. If the agreed price differs from the amount received, describe the actual reason and provide the available support. Withholding, a partial payment and a currency conversion are different situations. Calling them all “adjustments” leaves questions unanswered.
For business income, making the connection may take more than one step. An individual operating under a trading name should describe their actual legal status and explain that relationship where relevant. The name on an invoice and the person receiving payment need to be connected. A brand alone does not establish that a separate company exists. Being precise about who contracted and who received the money prevents a polished submission from describing the wrong entity.
One useful way to review the file is to read it as someone who had no part in the transaction. Is it clear why that person paid? Do the dates reveal the sequence? Is the gross amount distinguished from what was actually received? If something is missing, identify it and ask how it can be supplied. Filling a gap with assumptions can introduce a contradiction that was not there before.
Preparation includes taking care over how information is shared. Use the channel, recipient and format specified by the institution, checking them before sending. If supporting material contains information unrelated to the request, ask what scope the review needs and whether any redaction is acceptable. Editing a document on your own initiative may remove necessary information. Keeping a copy of the request and the submission makes it possible to continue the conversation using the same version of the facts.
A clear file may still lead to further questions. Documents do not guarantee approval, a response time or the execution of a transfer. The bank applies its requirements and the rules of its jurisdiction. A previously used folder can therefore serve as a working archive; earlier acceptance does not make it an automatic answer for a different transaction.
Preparation means being able to explain something true in a way another person can check. A brief account, connected figures and relevant documents make a transaction understandable. That is a task within the submitter's control, even though the final decision belongs to the institution.
General commentary using hypothetical examples. Specific requirements should be confirmed with the relevant institution; this article does not replace advice on an individual transaction.