CLIENT DUE DILIGENCE
Risk Matrix /

Follow the below steps to determine the risk of the potential engagement and the level of client due diligence measures that need to be applied. A client can pose a high, standard or low risk and measures will either be simplified, standard or enhanced. To start collate the alphabetical categories that the engagement falls into (A, B, C, D).

CATEGORY A[1]
If the answer is yes to any of the following questions:
Business Risk /
  • Does the client’s ownership structure:
  • Include a shell company?
  • Include bearer shares or other factors which obscure the ownership?
  • Include a Politically Exposed Person (PEP) or a High Profile Individual (HPI)?
  • Facilitate unusually large transactions with no obvious economic or lawful purpose?
  • Involve transportation (or goods etc.) across international boundaries (including hauliers, train operators and airlines)?
  • Appear unusually complex and/or does it include entities or locations that cannot be explained commercially?
  • Is the client's business
  • Cash based?
  • An unregistered charity or unregulated not-for-profit organisation?
  • Industry risk:

  • Art and/orantiques dealer
  • Charity*
  • Construction
  • Dormant entity (without a bonafide commercial reason for its existence)
  • Energy
  • Financial services*
  • Fossil fuels and distribution
  • Gaming, gambling or betting
  • Journalistsor authors with a significant overseas income
/
  • Investment companies* (not holding or property investment companies)
  • Manufacturing of machine parts
  • Metals, precious metals and gemstones
  • Money service business
  • Military weapons and equipment
  • Mining
  • Overseas landlords
  • Political
  • Real Estate (overseas)
  • Wholesale & distribution (overseas based and/or connection)

*If the entity is regulated by a regulator in section D, and there are no other risks from table A or B, this is considered sufficient to mitigate the industry risk and simplified documentation may be gathered.
Service Risk /
  • Co Secretarial

  • Capital and share reorganisation**
  • Company formation**
/
  • Company reorganisations**
  • Strike off and company restoration**

  • Insolvency

  • Administration (overseas)
  • Administrative receivership (overseas)
  • Bankruptcy (overseas)
  • Company voluntary arrangement (overseas)
  • Compulsory liquidation (overseas)
  • Creditors' voluntary liquidation (overseas)
/
  • Individual voluntary arrangement (overseas)
  • Informal solutions (overseas)
  • Members voluntary liquidation
  • Personal insolvency (overseas)
  • Scheme of arrangement (overseas)

  • Tax Investigations:

  • COP 8 (Specialist Investigations – SI)
  • COP 9 (Civil Investigation of Fraud – CIF)
  • Criminal Investigations
  • Hidden Economy Team investigations
/
  • Tax Mitigation Schemes
  • VAT investigations
  • Voluntary disclosure

  • Trust
  • Wills and probate
  • As part of this engagement are we likely to:

  • Hold client assets?
  • Receive client money?
/
  • Receive our fee payment from a third party or unknown source?

** A standard risk rating would apply if these services will be provided to an existing client, as long as there is a credible business reason, this does not include transactions that include a third party who is not a client.
Other Risk /
  • Is the direct client a Politically Exposed Person (PEP) or a High Profile Individual (HPI)*?
  • Do we know or suspect that the client or a person in the ownership and control structure is or has been involved in money laundering/terrorist financing?
  • Does the client or individual/entity within the group appear on a sanctions list?
  • Do we have any doubts about the information provided from the client?
  • In light of your knowledge of the client and the engagement, are there any other factors that present a higher risk of money laundering or terrorist financing to the Firm?
*Does not include celebrities from standard risk countries.
If the answer is no to the following question:
  • Have we had face to face contact with the client?

CATEGORY B or C[2]
Country Risk / Below is a list of countries that pose a standard risk. Please consider all of the ‘countries associated’ with the potential client. If all of the ‘countries associated’ appear in the below list category B will apply. If the ‘countries associated’ do not all appear category C will apply.
By definition ‘countries associated’ includes country of incorporation, countries of operation (for the direct client and group companies) and the nationalities and/or place of birth (if differs) for all connected individuals.
Jurisdiction Inside the EU
-Austria
-Belgium
-Bulgaria
-Croatia
-Czech Republic
-Cyprus
-Denmark
-Estonia
-Finland / -France
-Germany
-Gibraltar
-Hungary
-Iceland
-Ireland
-Lithuania
-Luxembourg
-Malta
-Netherlands / -Norway
-Poland
-Portugal
-Romania
-Slovakia
-Slovenia
-Spain
-Sweden
-United Kingdom
Jurisdiction Outside the EU
-Australia
-Canada
-Chile
-Israel / -Japan
-New Zealand
-Qatar
-Singapore / -Switzerland
-United States
-Uruguay
CATEGORY D
Regulatory Risk / Is the direct client regulated by any of the following:
  • Charities Commission
  • Charities Commission (EU equivalent)
  • Pensions Regulator
  • Pensions Regulator (EU equivalent)
  • FCA/PRA
  • FCA/PRA (EU equivalent)
  • SRA
  • SRA (EU equivalent)

Is the direct client or 100% parent company regulated by any of the following:
  • London Stock Exchange
  • Recognised Stock Exchange (see appendix 3)

Follow the below table to understand how to apply the CDD measures as per risk assessment.

CATEGORIES / AML RISK RATING / CDD MEASURES
A + B / High / Enhanced
A + C / High / Enhanced
A + D / High / Enhanced
B + D / Low / Simplified
C + D / High / Enhanced
B / Standard / Standard
C / High / Enhanced
A + B + D / High / Enhanced
A + C + D / High / Enhanced

J

Revert to the client due diligence guidance for a full list of required documentation according to company type.

Please note the difference between standard and enhanced is purely knowing the source of funds/wealth[3].

[1]Any factors that give rise to a positive confirmation in this section should be detailed in the client due diligence overview form.

[2]All high risk countries should be detailed in the client due diligence overview form. The full list of countries with the associated risk rating can be found in appendix 2.

[3]This involves a conversation with the client and a file note. It does not, in most circumstances, involve gathering supporting documents.