Wealth or asset management is the provision of banking and investment services in a closely managed relationship to high net worth clients.
Services will include bespoke services tailored to a client’s particular needs and may be provided through a range of products available to the client.
The availability of complex products and services that operate internationally within a reputable and secure wealth management environment that is familiar with high value transactions is attractive to money launderers and other criminals.
The Money Laundering and Terrorism Financing (ML/TF) risks associated with wealth and asset management include:
- Clients may be reluctant or unwilling to provide adequate documents, details and explanations;
- Clients often have many accounts in more than one jurisdiction, either within the same financial institution or group, or with different financial institutions;
- The transmission of funds and other assets by private clients often involve high value transactions, requiring rapid transfers to be made across accounts in different countries and regions of the world;
- Use of offshore trusts and companies as investment vehicles by customers;
- Politically Exposed Persons (PEPs) and customers from higher risk jurisdictions;
- Difficulty in identifying beneficial owners; and
- Complexity of financial services and products offered may break the audit trail.
Wealth and asset managers must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/CFT laws.