Table of Contents
Consider a typical case. The bank has come back a second time. You answered the first request properly: a detailed letter on where the money came from, when you sold your stake, and why the wire went through Dubai. You attached the purchase agreement and a year of statements. Two weeks later, a polite email: compliance needs further clarification, and the transfer remains under review. Your private banker has stopped giving timelines.
More paper is rarely the fix. The bank already has your account of events and can’t sign off on it as it stands. However thorough, a letter from the client is still the story of an interested party.
What usually closes the file at this point is a source of funds legal opinion. It isn’t the client’s paperwork with a lawyer’s signature on it. It is an independent professional investigation: counsel re-establishes the facts from primary sources, finds the gaps the client never noticed, analyzes each step in the chain under the applicable law, and draws the conclusions that follow from them.
What banks look for and which documents prove each type of income is a separate subject. This piece starts where that one stops: what the document that resolves the question looks like, and why a bank treats it differently when it comes from counsel.
When a Client Letter Stops Working
For a simple history, a letter from the client does the job. Five years of salary, tax returns, a transfer from your own account to your own account. There is nothing for the bank to chase.
A source of funds legal opinion earns its cost once the history stops being simple. The usual signs:
- A second round of questions. The first answer didn’t settle things, and another letter in the same voice rarely will.
- Third parties in the chain: funds sent by a business partner, a relative, or a company you don’t own.
- A stop in a third country (the UAE, Kazakhstan, Armenia) that the statements alone don’t explain.
- An amount large enough to move the relationship into enhanced due diligence, where the bank asks about wealth and not just this wire.
- A Russian company somewhere in the money’s history, with nobody yet having shown the bank who owns it.
In each case, the bank isn’t short of documents. It’s short of a professional review and legal analysis that someone is prepared to stand behind.
Opinion vs. Explanation: What Actually Changes
A client letter narrates. An opinion answers legal questions: what these funds are in legal terms, whether each transfer along the way was lawful, and whether a sanctioned party has an interest in them. Answering those takes far more than the documents the client has already sent the bank.
A client letter says, in effect, “this is what happened.” A source of funds legal opinion says something else: “we established these facts from these sources, applied these rules to them, relied on these assumptions, and reached this conclusion.” The bank’s compliance officer reads every part of that document carefully.
- The opinion is written to a named bank and answers its actual request. It isn’t a life story.
- Findings of fact. A chronology of the funds that counsel has rebuilt from primary sources, showing for each fact whether it rests on originals or certified copies, on public registers, or on the client’s word alone.
- Legal analysis. How each transaction is characterized (share sale, dividend, loan, gift, inheritance) and how US anti-money laundering rules and sanctions regulations apply to it.
- Assumptions and qualifications. The authenticity of signatures, the completeness of bank statements, and questions of foreign law that fall outside the U.S. lawyer’s expertise. Stating these limitations explicitly does not weaken the legal opinion. It makes the opinion transparent and its conclusions verifiable.
- A specific answer to each of the bank’s questions: funds of a stated amount derive from a stated transaction, the path from source to account is documented, and no interest of a sanctioned party was identified.
- The lawyer’s name and firm.
A client can quietly rewrite a letter. A lawyer who signs an opinion can’t walk it back without consequences, and the bank knows that.
How an Opinion Is Built
An opinion starts with investigation and analysis:
- Client interview. A detailed conversation about how the money was earned, who was involved, and what the bank has already been told. Any inconsistency with the first answer needs to surface before the bank finds it.
- Primary sources. Complete statements for the whole period, not selected pages. Corporate documents, contracts, profit distribution resolutions, tax returns. Where possible, we check them against public registers.
- Tracing the funds. Every amount is followed from its source to the US account. Conversion rates, fees, intermediate stops: a few thousand dollars the client dismisses as rounding becomes a question for the bank.
- The buyer, the payer, the banks along the route, and their owners. The sanctions review is a separate exercise, covered below.
- Analysis and conclusions. Only then does drafting begin: facts, applicable rules, analysis, conclusions, qualifications.
Much of this work never shows up in the final document. Counsel tests and discards explanations that don’t hold up and deals with questions the bank hasn’t asked yet but will. The client isn’t paying for a signature. The client is paying for the investigation the signature rests on.
Why Compliance Takes a Lawyer’s Word More Seriously
Consider the situation from the compliance officer’s perspective. The question is not whether you are honest. It is whether, a year from now, the officer can explain to a bank examiner why the account was opened and the wire transfer approved. They need documented justification that can be kept on file and withstand regulatory scrutiny.
A source of funds legal opinion meets that need better than a client letter, for two reasons.
First, a lawyer owes duties to people other than the client. For example, New York’s Rules of Professional Conduct expressly authorize a lawyer to prepare an evaluation of a client’s matter for use by a third party (Rule 2.3) and prohibit knowingly making false statements of material fact or law to third parties (Rule 4.1).
Second, the bank receives a finished legal analysis rather than a narrative, built on the same logic its own compliance team uses: source, path, counterparties, and risk indicators. The facts are established, the rules applied, and the gaps explained. The officer tests conclusions instead of rebuilding a history from two hundred loose pages.
None of this determines the decision. A bank can’t hand its customer due diligence obligations to outside counsel, and a good opinion doesn’t pretend otherwise. It doesn’t replace the bank’s review. It shortens it.
What a Legal Opinion Will Not Say
An opinion is only as credible as its stated limits, so here they are:
- No conclusions on Russian law. Where the analysis turns on whether income was lawfully earned in Russia, we rely on the documents and, where needed, on a Russian lawyer’s view, and say so.
- No clean bill of health for an entire fortune. The opinion answers a specific question about specific funds.
- We cannot guarantee the bank’s decision. No one can. What we can do is make sure the file answers every question the bank is likely to ask.
Sometimes the work shows that the opinion the client wants can’t be written. A key document no longer exists, or the money’s history doesn’t match what the client already told the bank. We say so either before the work starts, if an initial review of the information the client has provided makes that clear, or before anything goes out to the bank. That’s a result too: the client doesn’t send the bank a document that makes the position worse.
The Sanctions Conclusion a Client Can’t Give
One part of the opinion has no substitute in any client letter: the sanctions analysis and the conclusion it leads to.
A client can truthfully confirm that he or she isn’t sanctioned. The bank needs more. It needs to know whether a sanctioned person has an interest in the money: the buyer of the stake, the company that paid the dividends, the remitter, and their owners several layers up. Under the 50 percent rule, an entity owned 50 percent or more in the aggregate by blocked persons is itself blocked, listed, or not. Clients often have no idea who stands behind the buyer of their stake.
In our opinion, we map ownership on the source side and screen each link against the Specially Designated Nationals and Blocked Persons List (SDN List) maintained by the Office of Foreign Assets Control of the US Department of the Treasury (OFAC), recording the screening date. If there is a connection, the client hears it from us rather than from a blocking notice. A name match alone settles nothing. We aggregate the interests of blocked persons, including indirect ones, look for signs of control without formal ownership, and consider OFAC guidance that can affect the conclusion in borderline cases.
For the bank, this is often the most useful section. It can test the income story on its own. Tracing the buyer’s owners three layers up from the outside is much harder.
A Worked Example: A Russian Stake Sale and a Stalled Onboarding
This example is a composite of typical matters.
A client sold his stake in a Russian LLC for RUB 95 million. The buyer paid into his Russian bank account. After conversion, about $1.1 million went to his account in Dubai, and six months later $1 million moved on to a US bank where he was opening a private banking relationship.
His own letter came with the purchase agreement and statements. The bank replied with three questions: (1) Who was the buyer, and who stood behind it? (2) Why did the funds sit in Dubai for six months, and where did the missing $100,000 go? (3) Had tax on the sale been paid?
In the course of the work, we:
- interviewed the client and learned that part of the price had been paid not by the buyer itself but by an affiliated company, which the first answer to the bank never mentioned;
- reconciled the agreement, the extract from the Russian Unified State Register of Legal Entities (EGRUL) recording the transfer of the stake, the buyer’s corporate resolutions, and the bank statements by date and amount;
- traced the buyer’s ownership three layers up and found that 30 percent was held indirectly by an SDN-listed individual. We calculated the aggregate interest of blocked persons, examined whether there was control without ownership, and concluded that the buyer was not itself blocked, setting out the analysis and qualifications in the opinion;
- explained the pause in Dubai (the US account was still being opened) and the $100,000 gap (children’s school fees, with supporting documents);
- relied on a Russian lawyer’s opinion, attached as an exhibit, on compliance with Russian currency control rules;
- referred to the client’s Russian personal income tax return and proof of payment, with an express qualification that we were not opining on Russian tax law.
The source of funds legal opinion ran to 17 pages with 41 exhibits. The bank raised no further questions and completed onboarding about a month after receiving it.
The most important part of the opinion appeared in none of the client’s documents: a legal conclusion on a buyer with a sanctioned person in its ownership chain. Without it, the bank would most likely have declined, and the client would never have learned why.
Not every client needs a source of funds legal opinion. Once the bank comes back a second time, though, what matters is no longer the number of documents but the depth of the review and legal analysis behind them, and who answers for it. The best moment to move to an opinion is before the third round, while your first version of events is still consistent.
