Q&A Series – Club and Society Identification Procedure
NCA vs Law Society vs Money Laundering
September 24, 2018
The 3 Pillars of AML Compliance
August 20, 2019“I have been approached by a club/society for my services ...what customer due diligence checks should I undertake?”
AML & KYC Procedures
Customer Due Diligence in relation to UK Clubs and Societies.
Veriphy is committed to ensuring that firms and businesses across the UK have ample knowledge of key AML legislation and compliance procedures - especially in relation to situations that initially might be overlooked.
How would your firm treat a club or society? How would you ensure that you kept your firm compliant with UK Money Laundering Regulations? Various clubs and societies will often require the services of professionals and it is imperative that these professionals undertake the appropriate AML client identification procedures and customer due diligence checks.
Establishing and verifying the identity of your clients is necessary for staying fully compliant. Within clubs and societies, the appropriate scale of identification checking may vary slightly depending on various contextual factors. For example, there is a wide range of clubs and societies within the UK, from international active organisations to small, local clubs and societies and this must be taken into consideration when identifying potential risks in relation to money laundering. Therefore, in a situation where a club or society asks for your services you must carry out appropriate CDD, as their potential financial crime risks vary according to the scope of their purposes, activities and locality/ geographic reach.
Veriphy’s key points to consider:
1. Take into account the different money laundering/ terrorist financing risks presented by clubs and societies of different sizes and various types of activity.
2. Make an appropriate distinction between those that serve a limited social or regional purpose, and those where the activities are more sophisticated and the connections wider; for example with financial links to other countries.
3. When taking the above into account, use that information to assess the identity verifications most appropriate to the associated risk of financial crime. Involved in this process is also deciding which of the trustees or office holders should be checked.
For example:
- You should verify the identities of the officers who have authority to run an account or to give instructions about the use or transfer of funds or assets.
- You should also identify the class of persons who stand to benefit from the club or society’s activities - they will be apparent from a review of the club or society’s objects in its constitution.
- You should take appropriate steps to be reasonably satisfied that the person the firm is dealing with is properly authorised.
Low Risk of Money Laundering or Terrorist Financing
- Full name of the club/society
- Legal status of the club/society
- Purpose of the club/society
- Names of all the officers
High Risk of Money Laundering or Terrorist Financing
- Full name of the club/society
- Legal status of the club/society
- Purpose of the club/society
- Names of all the officers
- You should also require additional information on the purpose, funding and beneficiaries of the club or society
- You may then decide to verify the identities of additional officers, and put in place additional transaction monitoring arrangements
If you require more information specifically around clubs and societies, please look at the guidance issued by the Joint Money Laundering Steering Group Part 1, paragraphs 5.3.283-286 found at https://www.jmlsg.org.uk
