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AML Risk Assessment form help

Introduced by a third party

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I have just purchased the AML Centre from Tax Calc and updating it for all my clients.

Once of the questions is - Has your client been introduced to you by a third party. Most of our clients are from recommendations, therefore this should be a yes to the question. However, if I enter yes, it changes to High Risk and further information is required. This means that the majority of my clients will be high risk!

Am I misunderstanding the questions as otherwise it will show all my clients as high risk.

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By Hugo Fair
16th Jan 2022 11:22

This is the problem with 'automated' software solutions that follow a hard-wired path through a decision-tree ... which is what this sounds like.

Does it define "a third party"? And what is the "further information" required?
Most importantly of all, does the "High Risk" interim rating diminish as soon as you've informed the system about the manner of recommendations?

I understand your concern (it's illogical to treat a recommendation via a trusted client as more dubious than some unknown responding, say, to your internet page) ... so maybe a user of AML Centre can proffer hints & tips?

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the sea otter
By memyself-eye
16th Jan 2022 11:23

In HMRC's eyes all custom....err, clients are 'high risk'

That being so, what extra work does it involve for you?

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By coffee15
16th Jan 2022 14:41

I think I will have to call Tax Calc helpline and ask them as it does not sound logical that recommended clients need further checks.
Out of interest, if you have seen the client in person, do you also get their proof of address verified by someone who knows them?

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Replying to coffee15:
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By I'msorryIhaven'taclue
16th Jan 2022 15:25

I'd wait until Monday for Aweb advice.

My interpretation (although I don't use Taxcalc's AML) is that third-party introductions could relate to:
(i) introductions from your business sources, such as for example a financial adviser;
(ii) introductions from paid for leads generated by eg match-making agencies; and
(iii) introductions from one of your clients to his friends. family, or business associates.

To nibble around the edges, there were some AML changes around 2017 related to (i) above, whereby you and I should no longer rely wholly upon third parties' AML checks. So far as I'm aware that doesn't automatically mean EDD on your part - just that you conduct your own standard tests, at least in the first instance.

And, to continue round the edges, (iii) above surely carries no different a risk factor to a prospect finding and approaching you directly of his own volition, without the recommendation or introduction. Which is the part that has you (understandably) scratching your head.

So that leaves (ii). It's my guess that that's the case TaxCalc might have in mind. I'm not too well versed in AML regs, but I did update our policy recently and that would be my interpretation of TaxCalc's wide-ranging approach. I have read, although I'm at home today and cannot trace where, that EDD can be the order of the day when a prospect appointing you makes little or no sense, economic or otherwise. Not too much of a mental leap to see how that description could fit a client arriving via a We'll Find You an Accountant service.

In summary, a whittling down process to distinguish between the different types of third party introductions. Just my tin-pot interpretation.

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By SXGuy
16th Jan 2022 16:55

Personally I treat the question as. Has a 3rd party unconnected to you referred someone.

In that sense no. I'd find it more high risk if I got a call from an unknown saying, I have someone who needs your services, compared to an established client recommending you.

If I'm wrong so be it, but I'm not going to allow them to rig my aml procedures to make all clients high risk for the sake of it.

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Replying to SXGuy:
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By coffee15
16th Jan 2022 17:04

Do you use the Tax Calc software for AML or do you have the same question on other software?

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Replying to coffee15:
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By SXGuy
16th Jan 2022 17:31

I use tax calc aml

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Replying to SXGuy:
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By coffee15
16th Jan 2022 18:03

Do you mind if I ask you your thoughts on 2 other questions that are bothering me. If you would rather not answer, that is fine, I will call the helpline in the morning.

Is your client local to the business. Do you think it means lives local to their business or local to us
Add identity evidence. After you have entered details about the passport, it asks if you have confirmed residential adddress and then it says certified copy. Are you taking this as certified address or certified passport. If I have seen the client in person, I would say it is certified but I have not been to their address. I have quite a few clients to put on and want to get it correct. Cannot see any guidance on it. Any help would be very much appreciated.

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Replying to coffee15:
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By SXGuy
16th Jan 2022 22:24

I take it as being local to my business. In most cases I answer no. I think it may change to medium risk I can't recall but will still pass.

I would take certified copy to mean of the passport etc. Again if I've had sight of the original and/or make a copy of it myself, I don't see why I should make them get a certified copy of one.

Certify address is a strange one, because if you're using the checking facility and enter their address it will confirm you have a match, together with proof of address from the supplied id I don't see the issue.

I should say though that I wouldn't rely on the answers I give as every situation is different and some may apply to you that don't apply to me and vise versa.

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By adam.arca
17th Jan 2022 13:16

Interesting thread. I'm a Taxcalc user and had been considering upgrading to their AML Centre but, frankly, don't think I'll bother on the strength of all this.

Is it just me or do these questions appear to be gold plating the issue? And, in any case, I'm not a fan of being told what to think by software: life really is too short for this apparent amount of [email protected] around.

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Replying to adam.arca:
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By coffee15
17th Jan 2022 13:40

To be honest with you, I wish I had signed up for this a year ago. I am a one man band too and I have a money laundering inspection soon. Although I have been recoding the information on paper, it has made me realise that I need something more computerised. I am finding that some ID has expired and I have not obtained more recent copies. I am now frantically trying to get them. This system gives you reports as to when they expire. It may be a pain updating all the clients to start with but when that exercise is complete, I will be able to show it to the inspector and say, going forward, I am doing this. Well, that is the plan.

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Replying to coffee15:
Slim
By Slim
17th Jan 2022 14:41

you dont need to keep requesting a new ID as the old one has expired

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Replying to Slim:
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By Hugo Fair
17th Jan 2022 16:06

... unless the ID has changed in some respect (most commonly the surname post marriage or divorce).

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