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Falling foul of MLR

Client has new foreign customer wanting to pay for work to his new apartment via a UK reg Company

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Have an interior design client that does a lot of work in London and one new client who I think is a Bangladeshi national has signed up for initial work of £70k.

Wanted to pay via a Bangladeshi bank, which was rejected by my clients bank, then said he would pay via a Singapore bank which transpired to be an Indonesian Bank which was again refused by my clients bank.

Now wants to be invoiced to and pay via a UK company (registered December 2020) which had four director/shareholders all "Citizens of Antigua & Barbuda" one being my clients customer.

There is an address on Companies House for all the four being an apartment in London.     

I am uncomfortable with the whole scenario, but the customer is somehow managing purchasing a new £2 million property in London.  

What (more) due diligence can be done or do I tell my client to walk away !. 

Totally outside my normal remits.

Many thanks for your help with this

Replies (6)

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By paul.benny
16th Jul 2021 14:11

AML regulations largely apply to regulated sectors and high value dealers. I'm not sure that an interior designer is in scope.

Unfortunately, by coming to your for advice, you are now aware of the possibility that the funds are suspect - and so you may have an obligation to report. And that might even apply whether your client goes ahead with the work or not.

I suggest taking advice from your professional body.

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By Philosophic1
16th Jul 2021 15:40

Interesting dilemma, and I share your gut feel on the issue.

Good advice from Paul about checking with your PB - although remember that they are likely to be on the over-cautious side. That said, your client should also be checking their customers' identity etc. in cases like this, because the proceeds of crime and terror acts apply to everyone, and as your gut feeling has confirmed, this has a heightened risk profile. Mentioning that to your client may change their perspective.

Clarity on the parties involved, and what the transaction is for is key, and if you and your client can't get comfort on those points, probably best your client stays away, and you may still need to make a report (esp. considering the £2m property).

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By Calculatorboy
17th Jul 2021 12:48

why get involved in pure speculation on property purchase of someone who's not your client? , thats the solicitors job .

Don't see any issue with refurb work either, so long as invoice accurately records work done .its not your remit to satisfy yourself regarding a customer of one of your clients

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David Winch
By David Winch
20th Jul 2021 09:56

Put simply -
1. The interior designer is not within the 'regulated sector' and does not have to perform CDD on his customers. However he must not himself engage in money laundering. He will not be engaging in money laundering if he charges a sensible amount for his services and does not receive payment of more than the amount he has charged. (Even if he is paid from funds generated by his customer's criminal conduct.)
2. You, on the other hand, are within the 'regulated sector'. You therefore are obliged to report to your MLRO / the NCA any suspicion you have of money laundering (by anybody) which you have as a result of information which has come to you in the course of your work in the 'regulated sector'. So you need to prepare a Suspicious Activity Report re your client's customer if you have that suspicion.
David

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By Rgab1947
20th Jul 2021 12:00

All my alarm bells are ringing.

Classic ML process.

Banks rejecting may mean they have some info which they cannot share.

I would walk away very smartly and quickly.

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By David Gordon FCCA
20th Jul 2021 12:24

It is not your business to advise your client who to do business with.
Also, I have some sympathy with the customer. Some UK banks seem to be intent of making commerce with South Asia, difficult.
You may advise your client that he should be paid by a UK bank into a UK bank.
Also, following prudent UK custom with new customers / companies for provision of aesthetic services, do not give give credit.Materials paid up front, and labour on a weekly basis.
I would be more concerned if the client was Chinese mainland or Russian.

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