Why Client Screen?

Client Screening is now an integral part of professional services firms obligations from a legal, regulatory and reputational perspective however is fundamentally addressing one key question “is the client you took on all those years or months ago still the person/entity they were?”

Relationships between a law firm, a trust firm or a bank and its clients are often formed and built many months or years ago. Client screening provides an independent and systematic way to insure the foundations on which your client relationship were formed, are still true today.

The EU 3rd Money Laundering Directive came in to force on 15th December 2007 providing increased obligation on firms as well as enforcing numerous existing piece of legislation including The UK Proceeds of Crime Act, The Prevision of Terrorism Act 2008, etc.

Current legislation requires firms to not only screen their client but additionally hold an up to date PEP Register as well as have adequate systems and processes in place to ensure ongoing client due dilligence takes place on a risk sensitive basis. These systems should be demonstrable to auditors and enforcement agencies. Failure to implement appropriate processes and systems, without even considering whether or not you are assisting in laundering the proceed of crime, can have catastrophic consquences for your firm as well as key personnel such as the Money Laundering Reporting Officer.

This was highlighted in Sindicatum Holdings case, where they AND their MLRO, were fined several thousand pounds. In addition to the fine itself, the damage to a firm's reputation has been unquantifiable. Needless to say, the personal consquences for their MLRO were terminal!

As clients before more savvy in the relationships they hold with their key suppliers, firms are also being put under pressure to implement a gold standard for reputational protection with larger clients instructing intependent auditors in some cases.