Recently Martyn Fiddler were put in the unfortunate position of having to turn down a new piece of business for a reason I really hadn’t anticipated facing in 2024: being denied Client Due Diligence (CDD) on the Ultimate Beneficial Owner (UBO). Perhaps more shocking is the fact the denial came from an introducer, a fellow Corporate Service Provider (CSP) within the EU who managed several companies of the UBO, and the business they proposed to us was owned by politically exposed persons (PEPs).

It is not a new concept that AML regulation and legislation requires a risk-based approach to KYC and CDD collection. Higher risk factors (such as a PEP UBO) come with a need to enhance the level of CDD collection and monitoring a service provider undertakes.

In our recent scenario the level of CDD provided wouldn’t have been sufficient for a standard risk client let alone one of higher risk. To have taken the client on would have been shockingly cavalier: without certainty over a client’s identity a company runs the risk of breaching not just AML laws but possibly even international sanctions.

Whilst I have no idea exactly what happened next for those still involved after we walked away, I was left confused as to why and how this scenario arose in the first place. Whilst no one in the business community thinks they have to “police” their clients, and indeed no government is actually asking them to, surely all professional service providers are on the same page these days? Surely we are all committed to protecting each other, the industry and indeed innocent victims of crime by being vigilant, asking questions and taking reasonable steps to ensure answers are substantiated?

Certainly it can sometimes be tricky working out how to do the right thing, and no one turns down business lightly, but what shouldn’t be tricky is doing the right thing; as has often been said, integrity is doing the right thing even when no one is watching.