Source of wealth questionnaire from bank

Source of wealth questionnaire from bank needs to be signed by an accountant

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The bankers of one of our clients have sent them a source of wealth questionaire (six pages) for them as individuals and one for their business. This needs to be signed by a qualified accountant. Some of the info for example recent profits are easy to provide. However the business has been established for over 15 years and the source of capital are not easy to provide or for me to verify. Presumably if they don't get a satisfactory response they may withdraw banking facilities. I do resent the bank foisting their responsibilities on us with this quite onorous task, and my question is really how would other practitioners approach verifying the answers and would you seek to charge the client for it?

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By nrw2
17th Jun 2024 13:18

It's unusual for banks to push this onto an accountant?

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By Beancounting
17th Jun 2024 13:26

Well I have not seen one before in exactly this form (ie, needs accountant to certify figures) - but presumably this is not the only one.

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By Roland195
17th Jun 2024 13:35

Never encountered this (yet) either. Is the client either some definition of High Net Worth or engaged in activities that would require increased risk assessment from the bank?

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By Beancounting
17th Jun 2024 15:55

Not really. Its a single retail outlet.

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paddle steamer
By DJKL
17th Jun 2024 15:27

Source of capital is surely either profits retained or shares issued.

A summary of annual retained profits totaling the most recent accounts figure re retained profits and a scan through company stat books re share issues should deal with share capital/premium etc.

Revaluations direct to reserves ought to be apparent from Deferred tax note/property note

It is surely not that onerous a task.

Edit- I am assuming a limited company, this of course may not be the case.

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By Beancounting
17th Jun 2024 15:54

Supposing they introduced £80000 to start the business 15 years ago? Do we need to verify where it came from? Client says they sold another business, but cannot supply documentation and we have only acted for 4 years.

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Replying to Beancounting:
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By Roland195
17th Jun 2024 16:09

I've obviously not seen the form or the detail of the questions asked, but I would assume they mean the current sources of capital available to the business - share capital & reserves as mentioned rather than the historical funding used to start the business 15 years ago.

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By FactChecker
17th Jun 2024 18:50

The problem is that there's no 'standard' form for this kind of thing ... so the only people who can really tell you what's required will be the bank that issued the(ir) form!

You mentioned that the questionnaire is BOTH for them as individuals AND for one of their businesses ... so it is certainly feasible that they're interested in (or more precisely wish to be reassured about) more than just the BS etc for one company. And they *may* well be interested in the source of historic funds if there's any chance that the origin was overseas.

One other point: do they really just say ' qualified accountant', or are they more specific?
Wikipedia says: "British qualified accountants are full voting members of United Kingdom professional bodies that evaluate individual experience and test competencies for accountants. The term accountant has the same legal protection in the United Kingdom as that given to other professions such as doctors and lawyers." - which shows how much (or rather little) people understand about the label.

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By Roland195
18th Jun 2024 09:01

The forms that require certification by a qualified accountant will usually state their own definition by listing the memberships they will find acceptable (often including the Tax Institutes).

This is represented on here by views that split almost exactly down the same lines of the perennial qualified/QBE debate but the issue usually comes up when the client is trying to borrow money so somewhat understandable.

Interesting to see that this debate could end up being settled by the banks who make it a condition of maintaining an account.

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By FactChecker
18th Jun 2024 13:21

"Interesting to see that this debate could end up being settled by the banks who make it a condition of maintaining an account."

Interesting .. or frightening?
It's the logical conclusion of 'nudge' politics, where govt gets people/bodies to do what they (govt) want ... not by edict but by making the alternative too risky.
That, in essence, is what they've been fiddling about with their changes to IR35 ... so now using AML to put extra risk onto banks (but not directly preventing money laundering) is par for the course.

It could be argued that it's about time the 'methodology' was used more ... BBLS springs to mind ... but woe betide us if they get trigger happy.
We know HMRC don't like Agents (on principle), so when will they decide to move the liability from the taxpayer to whoever created/submitted the return?

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By Paul Crowley
18th Jun 2024 15:43

Yanks know nothing much about the rest of the world.
In the US trading without certification for almost anything is not permitted.

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By Rgab1947
19th Jun 2024 11:09

May be just may be something flagged the bank this needs further investigation.

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Replying to DJKL:
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By Roland195
17th Jun 2024 16:01

But surely it's unlikely that whatever seed money started the business, it would be formally set up as share capital?

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By DJKL
17th Jun 2024 16:30

Then it will be in current balance sheet as a loan from directors or not still be there if repaid earlier. (Again assuming a limited company)

Surely all the old balance sheets are on Companies House (if a company) albeit maybe creditors note details are not very full.

If old accounts not retained by client then he/she was not very smart- I have folders with accounts for our oldest entity from its first account in 1976.

I would just demonstrate how current balance sheet was created over the years and leave it at that, if they want more they can always ask.

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By Roland195
17th Jun 2024 16:58

DJKL wrote:

if they want more they can always ask.

My experience of this sort of thing with banks these days is that they don't and move to summarily freezing/closing the account without being able to explain what is at issue.

I find the signature by a qualified accountant part interesting too - what happens if your appointed agent isn't?

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By paul.benny
18th Jun 2024 10:05

I’d suggest seeking advice from your professional body. This looks fraught with risk.

There is a blurring of liability here that goes beyond the liability associated with an audit report. Who is even the client when signing off the form – the bank or your client? Whichever is the case, you probably need a separate engagement letter.

You should also think carefully about the wording of your sign off. Again, your professional body should be able to help.

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By wob
19th Jun 2024 10:14

If it helps I went through the same process a couple of years ago for a client with Santander (although I think all the UK banks are similarly bonkers), and because we were a bit casual about answers at first the bank did lock the account a couple of times whilst we tried desperately to give them the responses they would actually accept!

There were 2 problems that I remember. First, the answer to some of the questions was "not applicable", so we just said that and moved on. What we were supposed to do was print "not applicable" on a piece of paper and then get the accountant to certify that piece of paper!

The second issue was closer to the OP's issue as the company had been started by founders who had introduced £1 of share capital each and all profit since then had been generated organically from trade. We literally had to explain that the source of funds (£1 each) had come from each founder's previous employments, and again the accountant had to certify that as the answer.

In our case the certification was simply to verify that each document submitted electronically was a true copy of the original, which could have been done by either an accountant or a lawyer, so maybe not quite the same as is going on here.

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By Homeworker
19th Jun 2024 16:20

I was asked to help with this recently by my nephew, whose shop accounts I look after. That was Santander too. The wealth in the business was wholly built up from accrued earnings but I found it incredibly difficult to answer the questions they asked and of course because I am only ATT, not AAT or better, they would not accept me as qualified to certify the form.
My nephew has now transferred the company's banking to another bank!

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