There has been a long history of professional service providers maintaining a clean image under a shield of ignorance with regards to their customers’ activities. That is changing quickly.
The UK has passed legislation that gives the Home Office, the Serious Fraud Office and the National Crime Agency new legal power to stop this type of behaviour. White collar professionals, such as lawyers, accountants and fiduciary company agents, have long adopted a “don’t ask” policy with respect to their customers’ businesses. They carefully ensure compliance requirements are met using a tick the box approach to satisfy their legal and regulatory requirements.
This legislation is a game changer that forces professionals to adopt a Risk Based Approach. Professionals are now required to understand what their clients are doing with the commercial services they provide and can be held criminally liable for their participation in the criminal organization. This is punishable with up to 5 years of prison time. This legislation coupled with the trend to make tax evasion a predicate offense to money laundering place a very serious burden on every professional to really Know Their Client. Not investing in an appropriate tool and making a real effort to meet this responsibility will soon become a case of professional negligence.
KYC3 - Know Your Customer, Counterpaty and Competitor 