8 out of 10 IFAs Unaware of Key Government Legislation

IFAs have to deal with a wide range of clients and often a range of advice and products with varying risks being presented for Anti-money Laundering, the client or the product. Many IFAs still rely on the use of documents such as Passports, Driving Licences and Utility Bills. Often IFAs neglect to adequately check whether their clients are on any Sanctions or PEP lists.

A recent survey by Sanctions Search found eight out of 10 IFAs were unaware of key Government Legislation relating to Money Laundering, Terrorist activity and Politically Exposed Persons.

Chris Clare, Director of SanctionsSearch.com. said: “Most firms rely heavily on the guidance they receive from their Networks.

“But what we are finding is that the major Networks appear not to be protecting their smaller IFA clients – which in our view leaves them vulnerable to punitive fines for not adhering fully to the law.

“Firms are under the impression if the Network has not told them to screen against the Sanctions List they cannot be prosecuted for failures as a result – which is clearly incorrect and frankly asking for trouble.

“The fact is, anyone involved in dealing with a customer is able to commit the criminal offence that underpins this legislation, an offence that can result in seven years in prison.”

Mr Clare warned that a Network could “wriggle out” of its obligations as it did not deal directly with the client.

He added that there have been 26 Treasury updates to its Sanctions List from January to the end of March.

The warning follows a high profile penalty for Coutts & Company, which was fined £8.75m by the FSA in March for failing to take reasonable care to establish and maintain effective Anti-money Laundering Systems and Controls relating to High-Risk Customers, including Politically Exposed Persons.

Matthew Rich, IFA for Avon-based Alan Seward Financial Services, said: “We do rely on our Network to help us with compliance issues and feed down the latest rules