ICAEW.com works better with JavaScript enabled.
Anti-money laundering

Risk assessing clients

This page is part of a series on the 10 most common issues we've found when reviewing firms' compliance with the Anti-money Laundering Regulations.
See the 10 most common issues
The client risk assessment considers the risks identified in your firm-wide risk assessment and directs the amount and type of information you need to verify the identity of the client. Our third most common finding is that the firm had failed to perform a risk assessment of the on some or all of their clients.

What we found in our 2021/22 AML monitoring reviews

Often, the firm has focused on verifying the identity of the client without assessing the risk to determine the amount of evidence that must be obtained. We raise this finding if there is no evidence of a client risk assessment on at least one of our sampled client files. Some of the firms in this bracket will have performed a client risk assessment on some of their clients but not all.

Why is it important?

It allows you to tailor your response in proportion to your perception of risk. 

It helps you identify when you should perform enhanced due diligence on high-risk clients, and where you can perform simplified due diligence on low-risk clients

Key risks to consider

You must always perform enhanced due diligence when your client is linked to a higher risk third country or is a politically exposed person. 

Consider factors such as does the firm have a sound business rationale Is it cash intensive or have an overly complex business structure? 

The Money Laundering Regulations require all supervised firms to perform a risk assessment of each client, that considers those risks identified in its firm-wide risk assessment. The client risk assessment will direct the amount and type of information the firm needs to obtain to confirm the identity of the client. The risk assessment is important because it will identify when the firm should perform enhanced due diligence on high-risk clients, or where it can perform simplified due diligence on low-risk clients.

Resources to support compliance

Read the report

Read our 2021/22 anti-money laundering supervision report for more detail on the results of our monitoring reviews, the outcomes of those reviews and enforcement action taken. The report also summarises all of our anti-money laundering supervisory activity during the period.