The broker delays withdrawal until trader verifies source of income scam is a tactic where a broker refuses or delays the release of a trader’s funds under the pretext that they must first verify the trader’s source of income. While legitimate financial institutions may request source of funds (SOF) or source of wealth (SOW) information as part of anti-money laundering (AML) compliance, some brokers exploit this process unfairly, only invoking it when a withdrawal is requested—especially after the trader has made profits.

This isn’t about compliance—it’s a deliberate stalling technique to block or delay your withdrawal.

How the Scam Works

1. Trader Makes a Deposit and Trades Normally
The trader signs up, completes KYC, and deposits funds. The broker accepts the deposit without requesting additional documentation related to income source or wealth origin. Trading begins, and the trader may generate profits over time.

2. Withdrawal Request Triggers Compliance Alarm
As soon as the trader requests a withdrawal—especially one involving profits—the broker responds with:

“Your account is now under compliance review.”
“We require proof of income before processing your withdrawal.”
“As part of our AML obligations, please provide documents verifying your source of funds.”

Even though no such documents were requested during the deposit stage, the broker now demands intrusive financial information, often including:

• Employment contracts or payslips
• Tax returns or bank statements
• Asset ownership documents
• Letters from employers or accountants

3. Broker Delays or Rejects Submitted Documents
Once documents are submitted, the broker often:

• Takes weeks to respond
• Rejects documents without valid reason
• Requests additional, irrelevant paperwork
• Claims the documents are “not sufficient”
• Continues to postpone the withdrawal indefinitely

These delays are strategically designed to frustrate the trader and keep the funds locked on the platform.

4. Broker Uses Excuse to Seize or Expire Funds
In some cases, if the trader fails to satisfy their arbitrary requirements, the broker may:

• Suspend the account permanently
• Cancel the withdrawal request
• Expire the balance, claiming policy violations
• Blame AML laws to justify blocking the release of funds

In reality, the broker is using income verification as a post-profit excuse to confiscate or stall legitimate funds.

Why This Scam Is So Dangerous

The source-of-income withdrawal delay scam is especially harmful because:

• It gives the illusion of regulatory legitimacy, while being applied selectively and unfairly
• It is triggered only after profits, suggesting it’s meant to target successful traders
• It delays or prevents rightful access to funds, often indefinitely
• It involves deeply personal financial documents, creating privacy concerns and adding pressure on traders
• It creates confusion, as traders assume they’ve already passed all verification checks during account setup

Legitimate AML processes are not invoked retroactively at the point of withdrawal, unless predefined thresholds are met or there is evidence of illegal activity—neither of which is usually the case here.

How to Detect the Scam

1. Income Verification Is Requested Only at Withdrawal Stage
If the broker did not request income verification during the initial KYC or deposit process, but suddenly requires it when you request a withdrawal, this is a major red flag.

2. Vague Compliance Policies or Moving Goalposts
If the broker:

• Doesn’t clearly explain what documents are required
• Keeps changing the requirements
• Gives inconsistent reasons for rejecting your documents
• Claims that it’s the regulator’s requirement, but offers no proof

…then the broker is likely using AML rules as a smokescreen to retain your funds.

3. No Income Threshold in Terms and Conditions
Review the broker’s terms and conditions. If there’s no mention of income verification thresholds or policies tied to withdrawal amounts, then the sudden request is likely arbitrary and abusive.

4. Other Traders Report Similar Delays
Search for reviews or complaints from other traders about withdrawal delays linked to source-of-income verification. If it’s a recurring issue, this confirms the broker is likely engaging in a coordinated scam.

How to Protect Yourself

1. Choose a Regulated Broker with Clear AML Policies
Brokers licensed by FCA, ASIC, CySEC, or similar regulators have strict, transparent AML procedures. They:

• Request necessary documents upfront, not at the point of withdrawal
• Provide clear guidelines on what is needed for SOF or SOW
• Allow withdrawals unless there is reasonable suspicion of money laundering

2. Review the Broker’s Terms Before Depositing
Check whether the broker discloses:

• When and how source of income will be verified
• What triggers additional compliance checks
• Whether SOF is part of standard onboarding or only occurs with large transactions

3. Maintain Documentation in Advance
Keep a file ready with:

• Bank statements from your funding source
• Payslips or freelance income records
• Tax returns or invoices
• Any correspondence with the broker

This can reduce delays and serve as evidence if you need to escalate the issue.

4. Escalate the Issue Immediately
If your withdrawal is being delayed unjustifiably:

• Request the exact reason in writing
• Demand a clear list of required documents
• File a complaint with the broker’s regulatory authority
• Leave reviews to warn other traders

5. Withdraw Profits Frequently
Avoid accumulating large sums on the platform. Regularly withdrawing profits reduces your exposure if the broker later imposes withdrawal roadblocks.

Regulatory Expectations

Under MiFID II, FCA, ASIC, and CySEC standards, brokers must:

• Apply KYC and AML checks proportionately and at onboarding, not arbitrarily during withdrawals
• Request source-of-income documents only when transactions exceed certain legal thresholds, or if there’s reasonable suspicion
• Allow unrestricted withdrawal of client funds unless a clear regulatory breach is documented
• Handle compliance procedures transparently, without delays or discrimination

Brokers who exploit AML rules to delay or block withdrawals can be fined, sanctioned, or lose their licence.

Conclusion: If Withdrawal Triggers Income Verification, Be Alert

The broker delays withdrawal until trader verifies source of income scam is a tactic to trap funds under the guise of compliance. It is often triggered after traders earn profits and rarely applied during deposits or onboarding—making it a clear sign of broker manipulation.

To protect yourself, choose regulated brokers, know your rights, and withdraw profits regularly. If you’re facing this issue, act fast: document everything, demand clarity, and escalate the matter to regulators.

For expert guidance on how to trade securely and avoid scams, enrol in our Trading Courses. We’ll help you protect your capital and spot unethical broker behaviour before it’s too late.