Capital legalisation
Capital legalisation
Documentary proof that the money was earned legally (not to be confused with laundering — here everything is transparent and lawful). Needed to open an account abroad and invest in a program. Includes SoW, SoF, statements, declarations, and AML reports.
- What it is
- Documentary evidence that your capital was earned lawfully
- What it includes
- A dossier on the source of wealth and of specific funds: SoW, SoF, statements, tax returns
- Where it is required
- When opening an account, making a programme investment or a major transaction
- Not to be confused with
- This is not legalising illegal income but evidencing lawful income
- The main rule
- The dossier is assembled in advance, not in response to a request
In plain words
Capital legalisation, in our context, is documentary evidence that money was earned lawfully. The term is sometimes confused with money laundering, but the meaning is the exact opposite: this is about transparent capital whose origin you need to be able to show with documents.
The dossier answers two different questions. The first is how your wealth was earned in principle: business, salary, sale of assets, inheritance, investments (source of wealth). The second is where exactly the money for this transaction or investment came from: from which account, from the sale of what, from which receipts (source of funds). One does not substitute for the other — both are usually requested.
The set is made up of documents, not explanations: contracts, statements, tax returns, documents on the sale of assets, business accounts, confirmations of a gift or inheritance. The key requirement is an unbroken chain from the source of income to the account from which the payment is made. A break in the chain is the most common reason for additional requests and refusals.
When it is required
What the dossier includes
- The business and its accounts
- Employment income
- Sale of assets
- Account statements
- Specific receipts
- Movement up to the payment
- Inheritance
- A gift from relatives
- Investment income
- Tax returns
- Contracts and certificates
- Audit reports
How the dossier is assembled
- 01Map out the sources of income
- 02Gather supporting documents
- 03Build an unbroken chain
- 04Close gaps with explanations
- 05A dossier ready for filing
What you need to know
- SoW and SoF are different questions; both are needed
- The larger the sum, the deeper the check
- The chain must be unbroken
- Cash and informal income are the hardest to evidence
- Documents from archives and earlier years are requested in advance
Common mistakes
- Starting to gather documents after the bank’s request
- Explaining the source in words instead of documents
- Leaving gaps in the chain of fund movements
- Mixing personal and business flows
- Hiding difficult episodes instead of explaining them
What this means for a BRIDGES client
This is the most important part of the preparation. It is on the source of funds that applications most often stumble. We start work with a review of the sources of capital and assemble the dossier well before filing — because such documents are much harder to obtain after the fact.
Frequently asked questions
01 /What is capital legalisation?
Documentary evidence that your money was earned lawfully. It has nothing to do with money laundering — the meaning is the exact opposite.
02 /How does SoW differ from SoF?
Source of wealth explains how your wealth was earned overall. Source of funds explains where exactly the money for this transaction came from. Both are usually requested.
03 /What documents are needed?
Contracts, statements, tax returns, business accounts, documents on the sale of assets, confirmations of inheritance or a gift.
04 /What if some documents have been lost?
Gaps are closed with indirect evidence, certificates and affidavits. But such points are explained in advance rather than left to the reviewer’s discretion.
05 /And if the income was informal?
This is the hardest situation. It is dealt with separately and candidly: hiding episodes is pointless, as the check will see the break in the chain anyway.
06 /When should gathering start?
Before filing and before approaching the bank. Documents from archives and from past counterparties take a long time to obtain.
See also
Read next
This material has undergone editorial review by BRIDGES.
Preparing to evidence your capital?
We will review the sources and assemble the dossier in advance — before the bank’s first request.