Source of Funds compliance has spent much of the past decade as a background AML task, a box ticked on higher-value transactions rather than a genuine risk control. That has changed. Four separate developments in 2026 have pushed Source of Funds into the centre of the regulatory conversation across UK financial services.
According to SmartSearch, the first is the Solicitors Regulation Authority’s updated Sectoral Risk Assessment, published in August 2026, which described sources of funds and wealth as “a key control which is relevant across several high-risk areas.”
SmartSearch recently discussed why 2026 is the year Source of Funds became a regulator’s central control, and what firms need to do about it.
The SRA is no longer treating the check as a one-off transaction exercise; it now expects law firms to evidence, at any point, where client money originated and whether it remains available.
The second is the incoming Failure to Prevent Fraud offence under the Economic Crime and Corporate Transparency Act 2023, which begins enforcement in 2027. It introduces corporate criminal liability for firms unable to show reasonable steps were taken to prevent fraud, meaning fragmented emails and manual records will no longer count as adequate evidence.
The third is consumer sentiment. Credas surveyed 1,000 UK homebuyers and found 39% cite proof of funds as the single most frustrating compliance task they face. Nearly seven in ten, 69%, said they would stop working with a firm found in breach of compliance rules, while 80.9% said regulation was the biggest factor in trusting a business with personal data.
The fourth is infrastructure. Open Banking now serves more than 19m people and businesses in the UK as of May 2026, close to one in three adults, while the growing network of DIATF-certified providers gives firms the operational tools to run Source of Funds checks efficiently.
SmartSearch’s own platform data reflects the same trend: Source of Funds check volumes grew tenfold in the first half of 2026, led by residential property but spreading across wealth, investment and lending.
Firms moving fastest are embedding Source of Funds into standard onboarding rather than treating it as exceptional, adopting certified and audit-ready RegTech tools over manual document collection, and treating the process as a customer experience issue as much as a compliance one. With 2027 enforcement approaching and consumer patience thinning, firms still relying on ad hoc, paper-based checks are running out of runway.
Read the full SmartSearch post here.
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