22.04.09 MLR – acting for family members

22.04.09 MLR – acting for family members

If you have known somebody as a close relative for 40 years do you still need to ID him before accepting instructions?

AccountingWEB.co.uk 22-Apr-2009

Common sense approach
This post assumes that you are acting for your friends and relatives’ by the way of businesses and not in just a ‘family’ capacity which was never designed to be a part of the ML Regulations, for example a wife doing the books for her husband who may be a plumber

The Regulations actually state “identifying the client and verifying the client’s identity on the basis of documents, data or information obtained from a reliable and independent source;” Nowhere in the Regulations states that you must have documentary evidence on any client.

Information may be in any form, including word of mouth or personal experience etc, someone you know and trust may confirm a clients identity, your mother may confirm that the gentleman you are acting for really is your father (hopefully), and indeed you have probably visited your mothers house so you have information as to the home address.

We already know that it is not in the public interest to prosecute a regulated person who may commit a trivial or technical breach of the Regulations, this has been stated by SOCA and other law enforcement agencies, so you will should not receive any penalty for not having a copy of your mothers’ passport, so an element of common sense prevails. So document that it is your father and you been to his house, this would suffice for any Supervisory staff who may ask, if it does not then I would suggest that the supervisor gets retrained.

The problem with friends and relatives is not the knowing of who they are, but are you independent enough to effectively ‘police’ them. For example, you act for your farther and you discovered you father was involved in drugs dealing, could you file a SAR on him? If you could not, you stand a very good chance of being investigated along side your relative for those offences since you are ‘aiding and betting’ by turning a blind eye, especially if you continue to act. You can choose who you act for, who you want to be friends with, but in some respects you cannot choose your relatives.

Do not forget that a risk assessment is mandatory for all clients, including your relatives; here you would document your policy of what you would do to mitigate any potential risk of loosing your independence because of your association with the client relative. For example, your firm may be the agent, but an independent member of staff may complete most of the initial work.

Steve O’Neill
Business Tax Centre

Visit the BTC website for compliance help and support for firms in the regulated sector.