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If a corporate client indicates that the funds for a financial transaction are from a “shareholder’s loan,” do I have to inquire into the source of funds of the shareholder who lent the money to the corporation?

It will depend on the circumstances, including the structure of the corporate entity, the size of the loan and whether there is a loan agreement. A large loan with little or no paperwork and no security might be a red flag. The source of money for the lender would be relevant in assessing potential risks. As a matter of good practice, it would be prudent to obtain the name of the shareholder who provided the loan.

Note that if a client is a public company (a “reporting issuer”), you are not required to confirm the source of funds.