AML Risk in the TCSP sector
11/08/2022
Some in the TCSP sector believe their AML and sanctions risk profile is much lower than other financial institutions due to their limited financial exposures.
But the hard truth is that the underlying AML risk could be inherently higher. A client could be just one layer sitting among multiple corporate entities that conceal ultimate ownership, which is why robust, risk-based AML programmes are particularly crucial for TCSPs.
In 2021, the Institute of Chartered Accountants in England and Wales (ICAEW) reviewed its members in its Trust and company
service providers (TCSPs) thematic review 2021
and unearthed multiple deficiencies in TCSP AML processes.
Consequently, the institute, as the AML supervisor of no less than 11,000 firms, Recommended numerous improvements:
- Ensuring registered addresses haven't been hijacked
- Questioning the requirement for multiple nominee shareholdings or directorships and requesting additional details when asked to act as a nominee shareholder or director
- The requirement to carry out firm-wide AML risk assessments
- Improve the training of staff about red flags, risks, and customer-enhanced due diligence
- Better onboarding procedures to better recognise risks
Another challenge for TCSPs is that providers depend on third-party service providers to execute trust and agency activities, highlighting the importance of know your vendor (KYC) due diligence. This has become increasingly important as many Western countries are now intent on prosecuting violators to the full, regardless of how unwitting a party they may be.
This zero-tolerance approach is resulting in even greater scrutiny of compliance cultures and TCSPs will now find themselves among those on the front line.
The Team
Meet the team of industry experts behind Comsure
Find out moreLatest News
Keep up to date with the very latest news from Comsure
Find out moreGallery
View our latest imagery from our news and work
Find out moreContact
Think we can help you and your business? Chat to us today
Get In TouchNews Disclaimer
As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.
As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.