ACIP Best Practices on Source of Wealth (SoW) Due Diligence

ACIP’s May 2025 Guidance on Source of Wealth: What Fund Managers Should Know

In May 2025, the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP) issued updated Best Practices on Source of Wealth (SoW) Due Diligence (Link) —a significant development for Capital Markets Services Licence (CMSL) holders. With MAS signalling increasing regulatory expectations, fund managers must take note.

At Curia Regis, we’ve distilled the key takeaways and mapped out actionable steps to help our clients respond confidently.

What’s in the New ACIP Paper?

The latest ACIP paper outlines how financial institutions—including fund managers—should apply risk-sensitive, robust and verifiable SoW and Source of Funds (SoF) assessments. Notable guidance includes:

  • Risk-Based Tiering: Apply more detailed verification for high-risk clients using independent documents and robust plausibility assessments.
  • Verification Beyond Declarations: Validate wealth claims with supporting evidence such as financial statements, asset sales, inheritance documentation, or corporate filings.
  • Use of Open Sources and Adverse Media: Incorporate external research tools to corroborate client narratives and identify inconsistencies.
  • Continuous Monitoring: Move beyond “point-in-time” checks—reassess SoW during KYC refreshes or when significant changes in client activity occur.

Best Practices Across the SoW Due Diligence Lifecycle

To implement these expectations effectively, fund managers should ensure the following controls are embedded throughout the client lifecycle:

1. At Onboarding

  • Collect detailed SoW/SoF information early in the process.
  • Assign client risk ratings that guide the depth of verification.
  • Ensure front office teams are trained to gather meaningful SoW narratives.

2. Verification & Review

  • Establish checklists for consistent documentation and review.
  • Require second-line validation for high-risk clients.
  • Clearly record the rationale behind decisions and risk ratings.

3. Ongoing Monitoring

  • Include SoW/SoF reassessments during periodic KYC reviews.
  • Investigate any material change in client behaviour or transaction flow.
  • Keep records updated with fresh supporting evidence as needed.

4. Event-Driven Triggers

  • Initiate enhanced reviews when clients increase investments, add beneficiaries, or transfer assets offshore.
  • Reassess the credibility and legality of newly introduced funds.

Senior Management Responsibilities

The ACIP paper highlights that senior management bears ultimate responsibility for the effectiveness of SoW due diligence. Specifically, they must:

  • Set the tone from the top in reinforcing a strong compliance culture.
  • Review and approve AML/CFT policies and ensure they are implemented in practice.
  • Oversee resource allocation to ensure SoW assessments are well-supported.
  • Ensure escalation frameworks are in place for handling complex SoW cases.

Recommendations: What Should Fund Managers Do Now?

  • Review and Update Your SoW/SoF Policies
  • Align with the ACIP May 2025 guidance.
  • Introduce tiered procedures that match client risk levels.
  • Train Frontline and Compliance Staff
  • Ensure teams can identify, document, and challenge weak SoW narratives.
  • Promote a culture of professional scepticism.
  • Conduct a File Review
  • Test your current SoW documentation for completeness and plausibility.
  • Identify gaps before they’re highlighted in a regulatory inspection.
  • Establish Clear Escalation Procedures
  • Ensure high-risk cases receive appropriate senior-level attention.
  • Document and Justify Decision-Making
  • Maintain a defensible audit trail showing how decisions were made and why.

How Curia Regis Can Help

At Curia Regis, we help CMSL holders translate regulatory expectations into clear, practical processes. Our support includes:

  • SoW/SoF Policy Development

We help draft or enhance policies and checklists aligned with the ACIP’s risk-based expectations.

  • File Reviews & Health Checks

Our team conducts sample file reviews to identify gaps and provide actionable remediation steps.

  • Team Training

We deliver targeted workshops for front office and compliance teams on how to apply and document SoW assessments properly.

  • Senior Management Briefings

We advise boards and C-suites on regulatory responsibilities, governance expectations, and how to demonstrate effective oversight.

  • Regulatory Preparation & Support

We guide you through mock inspections and assist in responding to MAS queries related to AML/CFT practices.

Let’s Future-Proof Your SoW Framework

As regulatory scrutiny increases, ensuring your SoW controls are both robust and defensible is more critical than ever. At Curia Regis, we combine regulatory insight with operational know-how—so you can stay compliant and confident.

Ready to enhance your SoW processes, optimize your due diligence processes, and strengthen the overall AML/CFT framework for your organisation?

Contact your Curia Regis consultant or email us at Admin@thecuriaregis.com or visit us at our website here to get started.

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