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Check clients for terrorist blacklisting, firms warned

Mortgage brokers are believed to be falling foul of the regulator by failing to check their clients against a HM Treasury blacklist.

Under Treasury legislation, a financial firm can commit a criminal offence by transacting with or providing advice to individuals with links to terrorism.

The Treasury publishes a blacklist of such individuals on its website against which firms are expected to check their client database as part of compliance with the Financial Services Authority’s financial crime requirements.

Chris Clare, director of Sanctions Search.com, says that until recently compliance has been patchy, but in the last six months the FSA has been scrutinising the issue far more closely.

He says: “Feedback from clients suggests that impromptu checks by the regulator into whether sanctions lists are up to date are becoming increasingly frequent, with the issue being raised in standard FSA visits to many brokers.

“The rules on this have not been well communicated and lots of firms, especially smaller ones, are not even aware of the legislation. But the reality is that the FSA fined Royal Bank of Scotland for failing to check the sanctions list in 2010, so it will not shy away from fining smaller firms.”

Bill Warren, managing director of Bill Warren Compliance, adds: “I’m not surprised the FSA is talking to firms about this – it is not covered in the regulator’s handbook so many brokers will be unaware of the checks they need to carry out.”

The FSA published guidance on financial sanctions for small firms last month, in which it said it is good practice to check existing clients against the list, check all new customers prior to providing any services or transactions, and keep abreast of any updates to the list.

It says a recent review found inadequacies in the systems and controls to reduce the risk of a breach of financial sanctions at firms of all sizes.

The guidance says: “Small firms in particular should improve their awareness of the UK financial sanctions regime.”

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  • Advier 13th April 2012 at 11:33 am

    So if we find one of our clients is a terrorist (most of mine are quiet little old dears and their offspring or people I have known for years, but okay… then would it not be considerred tipping off for us to say, ‘oh sorry I cannot get you a mortgage’ because quite frankly they will probably know they can before they apply and are using a broker as part of their cunning. Surely we would have to proceed as normal but tip off the authorities and not our terrorist client – therefore yes if you think yiur client is a terrorist notify those that must be notified, but as for doing terrorist checks surely if anyone has to do this (and has the resources to keep these lists up to date) it should be the lenders?

    Loved the comments from jools.

  • Stewart Shram (ProExe Limited) 28th March 2012 at 3:43 pm

    ProExe Offer a Free to use Solution for searching the Finacial Sanctions List and also the Investment Ban List. All searches are saved in a database as an audit trail. Each search will give the user a reference number.

    We can offer periodic searches and unlimited users for as low premium of £25 + VAT per year.

    All user accounts come with unlimited manual searches, so you will not get charged for the searches you run.

    Each company signup comes with 1 Admin account and 1 user account when you sign up for Free, for unlimited user accounts then all you have to do is sign up for our £25 + VAT per year “Premium Product”.
    This charge is per company and not per user!

    Go to http://www.financial-sanctions.net to sign you company up now.

  • Cheryl 28th March 2012 at 3:07 pm

    Regarding searching the 85 page document, if you press control and f you’ll be able to type the name in of your client and it will search the whole document to see if your client name appears!

  • Prince 27th March 2012 at 5:53 pm

    so…..finally govt accepted the fact that lot of terrorist are out of the reach of law…..searching house????????
    HAHAHAHAHAHAHAHAH……What a joke……

  • Prince 27th March 2012 at 5:53 pm

    so…..finally govt accepted the fact that lot of terrorist are out of the reach of law…..searching house????????
    HAHAHAHAHAHAHAHAH……What a joke……

  • Sub Prime Kabooooom 27th March 2012 at 1:44 pm

    Bit of a legacy issue from the ‘good ol’ days’ this one but it does still crop up occasionally.

    As Shaks said…..in this day and age your going to have to be pretty determinted to squeeze out the small amount of clean money the other end with all the checks you need to go through.

    Now 2004, no income, no bank statements, flexi, no min time in self emp or evidence of it……we might as well have called these mortgages ‘The Washing Machine’.

  • jools 27th March 2012 at 12:19 pm

    This is total bobbins. If this really has to be done, then my Network can check the names as part of their checks…..cos I sure as hell aren’t going to.
    Sorry what’s that Sharon? a Mr Bin Ahmedinajad on the phone, large cash deposit, buying in Kensington. Put him straight through.

    Yes, I’m sorry Mr Ahmedinjad, but Santander want to know how much you spend on birthday and christmas presents. CLICK Hello, hello?

    Hey maybe the lenders have found a link between terrorism and interest only and that’s why they’re not doing interest only anymore.

    Beautiful British thinking!

  • HW 27th March 2012 at 11:53 am

    What a tatty document, but I suppose it provides some ‘jobsworth’ with an income. Just picked one random name from the sanction list and then checked my local phone directory to find 26 similar names. If I am approached by one of these, do I assume it could be the Taliban governor of Khandar (applying in his actual name) and show him the door?

  • Matt 27th March 2012 at 9:01 am

    To make it easier there is an Excel version and then you can use the Find function (CTRL +F) and then type your client/potential clients name. It will take approximately 2 mins to do and save you the hassle of searching through a PDF document
    http://www.hm-treasury.gov.uk/financialsanctions

  • Compliance Man 26th March 2012 at 6:18 pm

    This issue has been around for a long time and crops up every now and them. Firms may bemoan compliance advisors but at least they should help you be aware of your responsibilities.

    It is a criminal offence if you get this wrong so there is a need to check the register for all new clients and it is good practice to check all existing clients whenever the listing changes and definitely before doing new business with them.

    You can register for free with the Treasury to get the updates and you need to use ‘fuzzy logic’ when running a check. i.e. you need to be taking account of the fact that clients may try to slightly miss spell their names.

    If you use on line AML ID checking software these generally run checks against the Financial Sanctions Register (FSR), also often referred to as the Treasury List.

    There are also providers who offer batch search facilities when the data changes.

    Most importantly, as always, is not to forget to keep a record of your checks as evidence.

  • Becky 26th March 2012 at 5:01 pm

    There is a lot being said here about how awful life is and how hard sanctions checking is. It has to be done that’s for sure. We have been using SanctionsSearch for some time now and it is easy to use provides a great audit trail and the best bit of all is it is cheap it only costs us £20 per year.

    I think it is a great little service for a pain in the bottom problem good on them for not ripping us all off.

  • Justin Credible 26th March 2012 at 3:26 pm

    Mmmm…. just had a quick look – a natty little 85 page .pdf document with over a thousand (possible two thousand) names on it. OK, I can see a need to check but is there a searchable online database. Looking at some of the names would we also have to chack for misspellings? Never mind, I’ll just follow the FSA lead, employ someone full time to do it – doh! Forgot I don’t have a limitless supply of other people’s money….

  • Peter Turner 26th March 2012 at 3:19 pm

    I looked into how this problem might be resolved a couple of years ago but gave up – not because I couldn’t do it but when I looked at Chris Clare’s solution I found it could do it better and cheaper.

    What particularly impressed me was that his system not only scans every day but will compare any new entries on the list with your clients and alert you by e-mail if there is a match.

  • Shaks 26th March 2012 at 3:08 pm

    So terrorists have now resorted to buying 2 bed terraces on BTL mortgages? They can’t be very good terrorists if they have to register on the voters roll, take up credit facilities over a couple of years and then go house hunting in downward market. They would have to apply in their own name and prove with original documents who they are and then provide proof of income and bank statements and prof of a deposit. Then they have the hassle of contracting a lettings agent to find a suitable tenant. No, this is just not realistic. It’s got F**k all to do with terrorism. Why don’t they be honest and say it’s all part of the HMRC campaign to maximise revenues. If there is a list of dangerous terrorists who are known to the security services then surely they would be locked up already and not house hunting???
    I hate the fact that the broker community has been forced into becoming unpaid informers on behalf of the HMRC. They should go catch their own tax dodgers and not expect brokers to do it for free. We should be able to bill the HMRC up to 50% of any new revenues raised as a result of any leads provided. That’s what you call a enterprising initiative. The first place to look would be the FTSE 100 friends of the government.

  • David 26th March 2012 at 11:59 am

    Hi Dave the FSA published this among many other documents http://www.fsa.gov.uk/smallfirms/resources/pdfs/Sanctions.pdf

    Hi Dan the main issue we found with network systems is they only do a day one search they don’t re-screen after updates which needs to be done.

  • Clair Stevens 26th March 2012 at 11:51 am

    Dave the FSA published this among many other documents http://www.fsa.gov.uk/smallfirms/resources/pdfs/Sanctions.pdf

    Dan the main issue we found with network systems is they only do a day one search they dont re-screen after updates.

  • HW 26th March 2012 at 11:19 am

    Just had a look at the register which consists of 85 pages with no search facility. If I receive a mortgage application from Mohammed Azim do I assume it is the Taliban Governor for Khandar or one of over thirty with the same name listed in the local phone directory?

  • HW 26th March 2012 at 11:01 am

    They wouldn’t be much of a terrorist if they applied in their own names!

  • Dave 26th March 2012 at 10:49 am

    I don’t recall the FSA ever making a statement that brokers should check this list!

    If it is so important, then why hasn’t it been given prominence in their publications and on their website?

    I will have to make sure that when our advisers visit a middle-aged, married couple in the back of beyond they take an explosives-sniffing dog with them and sweep the house electronically for high-powered transmitters and AK47a!

    Where is this going to end?

  • Dan McGeehan 26th March 2012 at 10:19 am

    here is the list here
    http://www.hm-treasury.gov.uk/d/sanctionsconlist.pdf

    Also a lot of the new MLRO checks automatically do this. I know our networks do

  • Danny O'Sullivan 26th March 2012 at 10:10 am

    Wouldn’t the article be of more use if it had a link through to the list? Otherwise it is just PR for the
    compliance commentator?

  • Dazed & Confused 26th March 2012 at 10:09 am

    Trying to place a mortgage at present brokers are already having to jump more hurdles than are found in the Grand National…now it seems that the FSA would like us to carry the horse around with us!

  • Tony Bicknell 26th March 2012 at 9:51 am

    So how do we find this list? Whats the web link etc????

  • Mark 26th March 2012 at 9:49 am

    There is a great and cost effective solution from Linksfield Technologies that helps address this for brokers – http://www.linksfield.com/solutions/fsr-checker.aspx