Key Highlights – Wealth Management
Wealth Management is a personalised financial service to help affluent clients plan and manage their finances. The key components of wealth planning include portfolio management, estate planning, trusts, investment advisory services, and structured products.
It is important to ensure the legitimacy of funds involved in wealth management due to the high risk of money laundering (ML) and terrorism financing (TF). The risk is due to the involvement of complex products, large transaction values, bespoke financial arrangements, high-net-worth (HNW) services, cross-border structures, and ultra-high-net-worth (UHNW) client management.
Common ML/FT risks, typologies, and red flags that wealth managers must consider include the following:
FATF mandates wealth managers to identify ML/FT risks and develop policies and procedures accordingly. These entities should perform KYC/KYB checks while onboarding and screen customers against global sanctions and PEP watchlists. Further, they must perform Enhanced Due Diligence (EDD) for high-net-worth individuals (HNWI), PEP, and Ultra-high-net-worth individuals (UHNWI).
Wealth managers are expected to identify the source of wealth and the source of funds and verify them to determine the origin of funds. Moreover, these entities must regularly assess risk and monitor clients’ investment activities.
Besides this, a watchful eye should be kept on trusts, corporate structures, and cross-border transfers to detect hidden beneficial owners and shell companies. Alongside, wealth managers must perform suitability and plausibility checks based on the client’s profile and report suspicious activity to authorised regulatory bodies.
RapidAML provides extensive support to wealth managers by enabling them to comply with AML/CFT obligations through easing onboarding and related processes. The software automates customer onboarding, supports KYC/KYB checks and enables enhanced due diligence.
Further, RapidAML automates customers’ screening against the PEP and sanctions watchlists and helps identify and verify beneficial owners. The software performs transaction monitoring based on the customer’s portfolio to identify suspicious patterns.
RapidAML also performs risk assessments to develop risk scoring and rating. The software also provides alerts for reassessing the client’s profile based on unusual customer behaviour or changes in customer risk profiles.
RapidAML also facilitates task escalation and automates workflows to accelerate SAR/STR reporting for suspicious clients.
Wealth management involves complex structures, cross-border transactions, confidentiality, and high-value assets, which can be used to hide the true origin of funds and beneficial owners.
Regulators expect wealth managers to perform screening of trusts and offshore vehicles by identifying and verifying UBOs, performing EDD for high-risk customers, and conducting ongoing monitoring to uncover vulnerabilities.
Documents include bank statements, payslip, passbook, audited financial statements, stamped grant of probate, will, import and export documents, sale and purchase agreements, and government-issued documents and data.
HNW clients are at high risk and must be regularly monitored. Software such as RapidAML keeps a constant check on high-risk customers to detect suspicious activity.
Common red flags in private banking include unexplained wealth, opaque beneficial ownership, large sums of money transfers, rapid movement of funds, and avoidance of providing documents for the source of funds.
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