IFAs may be forced to collect significantly more information when establishing relationships with new clients under the latest set of FSA proposals aimed at combating money laundering.
Discussion Paper 22, Reducing Money Laundering Risk – Know Your Customer and Anti-Money Laundering Monitoring, published by the FSA this week, proposes extending the information that must be collected by firms under the know your customer requirements.
The obligations could be extended to information such as the purpose and reason for establishing the relationship, the level and nature of activity to take place, the relationships of any signatories, the source of the funds, details of the client's occupation, their sources of wealth and their net worth. IFAs are currently only required to verify a client's name and address.
The paper says firms may find they are falling foul of the high-level moneylaundering requirements if they only collect proof of identification from clients.
Some IFAs say much of what the FSA is proposing is already common practice and they would agree with going beyond simple identification collection.
Momentum Financial Services compliance manager Steve Davie says: “If what they are saying is that money laundering is not all about identifying the client, then we would tot-ally agree. The greatest weakness for us is identifying the source of the funds being invested.”