New AML guide details client purpose checks for non-financial firms

Non-financial obliged entities must assess and where relevant obtain information on the purpose and intended nature of each business relationshipErhvervsstyrelsenErhvervsstyrelsen under hvidvasklovens § 11, stk. 1, nr. 4, at establishment and on an ongoing basis, including when circumstances change, on suspicion and otherwise at appropriate timesErhvervsstyrelsen. Purpose is why the customer wants the relationship and why this firm; intended nature is the traits giving it character, such as business model, earnings and wealth. The assessment starts from the specific customer; standard phrases are not enough even within one industry. What is known, what was assessed and the conclusion are written downErhvervsstyrelsen, feeding the risk assessment and the focus of future handling. A missing or deficient assessment leaves the risk profile uncovered and gives no basis for intensified monitoring or further examination; suspicious matters lead to closer examination and, where they cannot be dispelled, a report to HvidvasksekretariatetErhvervsstyrelsen.

Auditors relate requested services, typically advice on operations, tax or VAT, bookkeeping, accounts, assurance or non-assurance statements, filings, formations or valuation reports, to the background for the request and check wishes against needs. Warning signs include an atypical service such as a physical shop wanting a C/O address, flight from another auditor or frequent switches, an unreferred customer from far away, and insistence on self-filing such as VAT with Skattestyrelsen. Intended nature covers the origin of funds for large investments and formation funds, whether cash or apportindskud, always addressed where the firm assists formations, conversions, capital increases or capital attestations; the business model and earnings base with industry risks such as high-risk third countries, cash, foreign labour or invoicing of others' work; asset fit; and traits such as staff-payroll coherence, complex structures, beneficial owners abroad, CVR contact match, import or export, sanctioned-country trade, expense-model fit and lifestyle beyond earnings.

Bookkeepers apply the same structure around bookkeeping, annual accounts, payroll, VAT and payroll-tax returns, budgets, bank setup, payment approvals and formations, with the same purpose questions and warning signs and the same intended-nature blocks on funds, models, assets and customer traits.

Estate agents establish the concrete background for the sale or purchase and for choosing this agent; a distant customer or a purpose inconsistent with other circumstances needs a closer look. For a natural-person seller they address ownership period with trade history on short ownership, price against the market, financing with unencumbered ownership natural only after long holding, and renovations with financing, professional-versus-self-built plausibility and documentation. Corporate sellers add business model, strategy, geography and fund origins; buyers add own funds and origin, financing, renovation plans and employment fit. The evaluation is written down with its basis and conclusion and feeds risk scoring and focus.

Art dealers and auction houses test why the customer buys or sells through this house and whether the choice is plausible; a first-time buyer of an expensive work or a corporate buyer with no room for it draws attention. They address the seller's trading pattern and provenance against finances, the buyer's affordability source and collecting pattern with means to pay, ownership credibility and the belief that legitimate funds are used, documenting the knowledge and searches relied on. Worked customer cases illustrate the method per client as fictitious inspiration, not reusable standard texts.

Legal basis is hvidvasklovens §§ 10 and 11Erhvervsstyrelsen, with reports on suspicion to HvidvasksekretariatetErhvervsstyrelsen.