That highlights another point really well, the low-level financial worker's perception of "source of fund laws" (AML/KYC) is laughable, the reasoning they tell the investor/customer is laughably incorrect, just an ambiguous quip about "security purposes" or "making sure you aren't a drug dealer/terrorist/laundering money"
when thats all incorrect. from the investor/customer and low-level banker's perspective, it is impossible to distinguish between the actual law, their private company's interpretation of that law, strictly separate company policy, their implementation of that combination of things, the flaws or merits of that implementation, the flaws and merits of the law.
In this case, the person asking you actually doesn't care at all. Your role is to simple not say the bad word. A word you don't know. So you can always say pretty much anything, as long as its not "I'm on the OFAC list and I'm circumventing sanctions moving money from my heroin business".
A US citizen, for example, would never have any restriction banking in the US due to prior conduct (unless you pissed off that sector due to a history of overdrafts, bounced checks, see chexsystems). Al Capone would always be able to open a bank account or brokerage account or buy property. The Patriot Act would have never flagged the Saudi terrorist wire transfers despite being passed under the guise of flagging that kind of thing. AML/KYC is just a data mining operation masqueraded as preventing ... something. Something thats not terribly expensive, especially when compared to the amount of money that isn't flagged. Turns out people just don't want to blow up planes and buildings. The only people convicted of violating capital controls are the poorest of the proletariat that has some ambiguous and wrong understanding about "moving $10,000", and gets thrown in prison for attempting to circumvent it simply because the law against circumventing the threshold is on the books, whether the threshold would have applied to how the money was moved or not!
The entire thing is a ridiculous waste of taxpayer and public sector resources, and private sector compliance costs are probably overhanging a full digit % of the GDP growth.
Its successfully stigmatized the concept of having money, from the very population that needs and strives to have it the most! While everyone that can afford education or legal help or a dynasty of passed on knowledge is operating with complete freedom.