Due diligence

Although it is the RM's job to sell services to the client, he/she is also compelled to gather information on him/her. This, according to point 5.9, means asking him at every turn for his reasons for using financial institutions, businesses or addresses in different jurisdictions. If the HNW uses these facilities across the private bank's group, it should consider the appointment of someone to act as a leading RM. WealthBriefing would like to hear from any readers who know this to be the way their businesses do things. If such a structure exists, the leading RM's job is to compile enough information to know and understand the HNW's business structure.

Private banks, as the JMLSG often points out, should gather information at a far more granular level that normal retail banks would for their customers as the risk is greater. RMs, according to point 5.13, should obtain information on the following:

• the origins of the client’s wealth;
• documents relating to the economic activity that gave rise to the wealth “where possible and appropriate”;
• the nature and type of transactions;
• the client’s business and legitimate business structures;
• for corporate and trust structures, the chain of title, authority or control, leading to the ultimate beneficial owner, settlor and beneficiaries, “if relevant and known”;
• the reasons why the client is using complex structures, if he/she is;
• the use the client makes of products and services; and
• the nature and level of business to be expected over the account.

This last is likely to be tricky as, as one MLRO once put it, “there are no usual transactions with HNW customers.”

Visiting hours

Point 5.15 calls on relationship managers to do more detective work: “in wealth management, relationship managers should generally visit their clients at their place of business in order to substantiate [its] type and volume.” They should keep a record of:

• the date and time of the visit;
• the address or addresses visited;
• a summary of both the discussions and assessments;
• any commitments or agreements;
• any changes in the customer's profile;
• his/her expectations for product usage, volumes and turnover;
• any international dimension to the client’s activities and the risk status of the jurisdictions involved; and
• updating the client profile “where appropriate.”

There is one job that the RM does not have to do: all new wealth management customers should be subject to “independent review and appropriate management approval and sign-off” (point 5.16).