Identifying the client
At 11.9% of all firms reviewed, we found that the firm had performed ineffective client identification procedures. In some cases, the firm had failed to properly identify all of the beneficial owners. In others, the firm had failed to properly understand the nature of the client’s business, or the jurisdictions that it operated in. During our reviews, we perform basic open source checks on the client and for some non-compliant firms, we identified information about the client that the firm didn’t know.
Assessing risks
At 12.6% of all firms reviewed, we found ineffective risk assessment documentation. During our monitoring reviews, we re-perform the risk assessment to check that the firm has identified all the risks. We do this by reviewing the “know your client information” as well as open source information about the client, and cross-checking this information with sources of risks and red flags such as the AASG Risk Outlook. Ineffective risk assessment documentation is where the firm has not documented all the same risks that we identified but where the firm is able to discuss and describe the risks.
Verification
At 10.2% of all firms reviewed, we found firms had performed ineffective verification procedures. Where we have raised this area of non-compliance, the firm has not gathered sufficient evidence to manage or mitigate the risk identified. In some cases, the firm has simply performed more ID verification on a beneficial owner, when the AML risk relates to transactions in a high-risk third country. Firms must tailor their verification work to ensure they gather enough evidence to satisfy themselves that the risk of being used to launder is sufficiently reduced.
Read the report
Read our 2024/25 anti-money laundering supervision report for more detail on the results of our supervisory activity.
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