ICAEW has produced a short video to help members know their clients better using open sources of information
Open source information refers to anything that is publicly available. Used alongside existing client due diligence procedures members can gain a more complete picture of who they will potentially be dealing with.
Step one is a simple Google search of the client’s name. Seems obvious but time and again some firms are too focused on verifying the identify of a prospective client without doing wider background checks which could potentially raise concerns about the client’s activities.
Practitioners should also be prepared to undertake more complex searches using strings of words, especially words that indicate financial crime such as “fraud” or “scandal”. Perhaps words that indicate undesirable relationships can also be used as part of the search exercise.
Newspapers, online news and subscription news services should also be part of the mix. News aggregation services are also useful and reduce time spent scouring multiple outlets. ICAEW members can use our own client screening service for three name checks per week.
You should review and document the information obtained and check for consistency with anything provided to you by the client whilst applying professional scepticism.
If alarm bells ring when you are conducting research on clients, raise any concerns directly with them. Information that is in the public domain can be discussed openly – after all, your reputation could be at stake.
“This type of research does not have to be onerous,” says Omid Tissier, ICAEW’s Economic Crime and Ethics Manager. “It will add value and can potentially help you avoid taking on those problem clients you wish you didn’t have.”
He continues: “It is far better to have as much information as possible about a prospective client before agreeing to an engagement than to later have to step down, and open source research is a valuable tool to use.”
For more information on open source and other electronic client due diligence (CDD) resources please see this helpsheet.