Proof of income, also sometimes referred to as the source of wealth, is the process of requesting a customer a document that shows how they earn their money, ensuring that the transactions are authorized and fair, not linked to any fraudulent activity. Employees, as well as business owners or self-employed individuals, need to prove their earnings this way. For example, businesses would be asked to provide cash flow statements, tax returns, and other official documents as proof of income.
This process aims to verify the client’s financial stability, verifying if they meet their obligations, such as the ability to get a loan, access a credit card, or rent a new apartment in order to ensure that they have proper income to cover the upcoming payments. So, in general, proof of income is essential for many financial transactions, and requirements vary by country and currency.