Large incoming payments to a personal cryptocurrency account may become grounds for an additional review by an exchange, especially if the nature of the transactions differs from the user’s usual activity. In such a situation, it is not sufficient to limit oneself to a general explanation. It is important to consistently demonstrate where the funds came from, who they belong to, and what economic basis the transactions have.
A client who owns a company in Hong Kong approached us with a similar matter. He was receiving large payments into his personal account on the WhiteBIT cryptocurrency exchange. Following an analysis of the transactions, the exchange’s AML department sent an official request requiring documentary evidence of the source of funds and explanations regarding the transactions conducted.
The request itself did not mean that the services would be terminated; however, leaving it without a detailed and substantiated response would have been imprudent. Therefore, our task was to build an evidence base that was clear to the exchange and establish a connection between the funds received and the activities of the client’s company.
Below, we explain how we prepared the response and supported the review through to its completion.
Analysis of the Transactions and Circumstances of the Receipt of Funds
We began our work with a detailed analysis of the situation. We requested additional information from the client, reconstructed the sequence of transactions, and conducted an audit of all amounts and transactions received into the account.
It was important not simply to list the movements of funds. We needed to establish the overall context of the transactions and determine which circumstances required separate explanation. At the same time, we reviewed the documents of the owner’s Hong Kong company to understand how they could be used to confirm the source of the funds.
Particular attention was paid to the connection between the personal account and the company. In this case, it was necessary to correctly explain the financial relationship without creating discrepancies between the actual situation, the corporate documents, and the information provided to the exchange.
Preparation of the Evidence Base for the AML Review
After analyzing all the available information, we developed a legal strategy for confirming the source of the funds. The documents of the client’s Hong Kong company formed the basis, allowing us to substantiate the origin of the incoming payments.
When preparing the response, it was important not to overload the submission with unrelated materials. Each document had to supplement the relevant explanation and help the AML specialists understand the logic behind the transactions conducted.
The main stages of our work:
- Transaction audit. We reviewed the amounts received, the sequence of transactions, and the circumstances in which they were conducted.
- Collection of explanations. We obtained detailed information from the client regarding the source of the funds and the connection between the transactions and his company in Hong Kong.
- Formation of the documentary evidence base. We determined which official company documents could confirm the source of the funds and organized them into a coherent system.
- Preparation of the response. We prepared comprehensive explanations for WhiteBIT’s AML department and attached the necessary supporting documents.
- Support throughout the review. We submitted the compiled package to the exchange and continued communicating with it until the request was fully closed.
This approach made it possible to present the situation consistently: the explanations disclosed the circumstances of the transactions, while the documents substantiated the position presented. As a result, the reviewing party received not a set of separate files, but a comprehensive substantiation of the source of the funds.
WhiteBIT Request Closed Without Reservations
The explanations and official documents provided were accepted by WhiteBIT without reservations. The source of funds request was closed, and the client continued to fully use his personal account on the exchange.
For the client, this meant that the review was completed without the need to collect the materials again or re-explain the circumstances of transactions that had already been conducted. All the necessary information was provided as part of a single comprehensive submission.
This case demonstrates how important it is to properly structure a response to a cryptocurrency exchange’s source of funds request. This is particularly relevant when a personal account is used for transactions related to business activities. In such situations, what matters is not only the availability of documents, but also how consistently they explain the origin of the incoming funds and their connection to the client’s activities.
Have you received a source of funds request from a cryptocurrency exchange? Lawrange specialists will help analyze the situation, prepare documentary evidence, and support the review through to its completion.
