Source of funds compliance has long been treated as a routine step within the broader anti-money laundering (AML) process, an operational box to tick on higher-value transactions rather than a genuine risk control.
According to SmartSearch, in 2026, that view has changed for good. Source of funds is now positioned as a core regulatory requirement across most regulated financial activity in the UK, and four separate developments explain why.
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 first is regulatory. In August 2026, the Solicitors Regulation Authority (SRA) published an updated Sectoral Risk Assessment covering AML, terrorist financing, proliferation financing and sanctions.
The update named sources of funds and wealth as “a key control which is relevant across several high-risk areas,” signalling that the SRA now expects firms to evidence where client money originates throughout an entire relationship, not just at a single transaction point.
The second is legal. From 2027, the Failure to Prevent Fraud offence under the Economic Crime and Corporate Transparency Act 2023 comes into force, introducing corporate criminal liability for firms unable to show they took reasonable steps to prevent fraud. Structured, audit-ready source of funds records will become essential evidence, replacing the fragmented emails and manual files many firms currently rely on.
The third driver is consumer sentiment. Research from Credas, surveying 1,000 UK homebuyers, found 39% rank proof of funds as their most frustrating compliance task. Meanwhile, 69% said they would stop working with a firm found in breach of regulations, and 80.9% cited regulation as the biggest factor in trusting a business with personal data. Compliance is no longer a background formality for consumers; it now shapes loyalty directly.
The fourth is technological readiness. Open Banking adoption has reached more than 19 million UK users and businesses by May 2026, roughly one in three adults, while DIATF-certified identity providers continue to expand. The tools to run source of funds checks efficiently now exist at scale.
SmartSearch’s own platform data reflects the same trend, with source of funds check volumes growing tenfold in the first half of 2026, led by residential property but rising steadily across wealth, investment and lending. Forward-thinking firms are responding by embedding source of funds into standard onboarding, adopting certified digital tools over manual collection, and treating the process as a customer experience differentiator rather than a compliance burden alone.
Read the full SmartSearch post here.
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