You get a referral from another firm. What is your AML obligation?

In such a situation, who is actually your client?

The big question in relation to anti-money laundering is: if you receive an assignment through another firm, who is the ultimate client? Who do you identify?

• Nobody?
• The referring firm?
• Or the actual client for whom the matter is being handled?

The answer: always the actual client, the person who submitted the matter.  

No contact with the actual client, what to do now?  

You receive the documents, write a recommendation, but you have no direct contact with the actual client. It would be strange to request AML-related information from the client out of the blue, we understand that.  

What we then see happening in practice is that firms ask the referring firm to provide the documents they have and leave it at that. Unfortunately, according to the legislation, that is not sufficient. 

You remain responsible

It may feel uncomfortable to ask for a copy of ID or company documents through intermediaries. However, you must carry out the AML client screening yourself. You may use the information collected by the other firm, but you must: 

• check whether the information is complete, up to date and correct;
• assess whether there are any risks associated with the service provision;
• record that you have carried out the check yourself. 

Our advice: send an email with all the required documents to the referring firm. Your contact person there can upload or send you all the information you need for your AML check. If anything is missing, he or she can ask the client for the missing information.  

As a firm, you remain responsible for ensuring that the information is complete and up to date. You may use the other firm's research, but you must check that the information is correct and assess the risk based on the services provided to the end client. 

Common excuses

Right, that's how it should work. In practice, we often hear these arguments or excuses: “We work with this firm, quickly write up some advice and forget that we also have to do AML research.” Or: 'But the invoice and engagement letter are in that firm's name, so isn't that my client?'  
 
Unfortunately, that is the engaging party and, according to AML, not the ultimate client that you are required to identify and screen. Believe us, this happens very often in practice. So don't be ashamed if you do the same. Sometimes the AML work simply does not outweigh, for example, the hour of work you have done or the advice you have written or given. We understand that too.

Nevertheless, the fact remains that you are not allowed to work for that client without the AML research. It is therefore important to be aware of this obligation and to point it out to the firms you work with. You can blame the legislation for this, and if it is a firm based in the EU, they should have the same obligations. 

The more often you go through an AML process together, the smoother it will go. Always start with advance notice. Indicate that you must comply with anti-money laundering legislation and that you will soon be asking the firm for all the information. Strictly speaking, you may only start work once the AML check has been completed.

AML software makes it easy

Fortunately, you can use AML software such as RegLab. The advantage of this is that you do not have to request your KYC documents by email, check them for completeness, and save or retype them. With RegLab, you send a link with information to the referring firm. They then upload all the information to a single, secure location. This is a very user-friendly and efficient way to collaborate with other firms within the AML framework. Not sure whether working with AML software is right for your firm? Feel free to request a demo. 

The only exception

There is one exception. Are you writing general advice for the referring firm? For example, about how the national tax system works, which the referring firm wants to use for various clients. In that case, you may consider the referring firm itself as a client. However, this only applies if your advice is not intended for a specific client or entity. 

That is really the only exception... And an exception cannot become the standard.