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FRATRES
Financial crime

Client Due Diligence & Know Your Customer Standard

The identification, verification and beneficial ownership standards applied before and during any client engagement.
Document reference
FGL-LEG-09
Version date
1 July 2026
Applies to
Fratres Limited

1.Purpose, scope and application

1.1
This Client Due Diligence and Know Your Customer Standard (the Standard) sets out the identification, verification, beneficial ownership, screening and review requirements that Fratres Group Limited (the Company, registered in England and Wales) applies before accepting any client, before commencing any engagement, and throughout the life of every business relationship.
1.2
The Standard is the operational instrument of the Company’s Anti-Money Laundering and Counter-Terrorist Financing Policy (FGL-LEG-08). Where that policy states the principle, this Standard states the evidence, the sequence and the decision. The two documents must be read together, and in the event of any inconsistency the more demanding requirement shall prevail.
1.3
The Standard binds every director, officer, employee, consultant, secondee, contractor, agent and introducer of the Company, in every jurisdiction in which the Company operates, including the United Kingdom and the People’s Republic of Bangladesh. It applies irrespective of the size, fee value or expected duration of the proposed engagement.
1.4
No engagement letter may be issued, no fee may be invoiced or accepted, no introduction may be made to a government body or counterparty, and no substantive work may be performed until client due diligence has been completed and formally approved in accordance with this Standard. Preliminary, non-substantive discussions to establish the identity of a prospective client and the general nature of its interest are permitted, and are themselves subject to clause 15.
1.5
The Standard applies not only to the client but to each counterparty whose identity and integrity is material to the mandate, including introducers, joint venture partners, local sponsors, nominated agents, consortium members, and any third party that will receive value, directly or indirectly, in connection with the engagement.
1.6
Compliance is mandatory. A failure to apply the Standard, a failure to escalate where escalation is required, or the completion of a due diligence record that the person completing it knows to be incomplete or inaccurate, is a disciplinary matter capable of amounting to gross misconduct, and may in addition constitute a criminal offence.

2.Interpretation and definitions

2.1
In this Standard, headings are for convenience only and do not affect construction; the singular includes the plural and the plural the singular; a reference to a statute or statutory instrument includes that instrument as amended, extended, consolidated or re-enacted; and the words “including”, “in particular” and “for example” are illustrative and do not limit the words preceding them. “Must” and “shall” denote a mandatory requirement; “should” denotes the expected approach from which departure must be recorded and justified.
2.2
The following defined terms are used throughout the Standard.
Adverse Media
Credible reporting, litigation records, regulatory findings, insolvency records or enforcement action, in any language, indicating involvement in financial crime, corruption, sanctions evasion, fraud, serious environmental or human rights harm, or association with a person involved in the same.
Beneficial Owner
A natural person who ultimately owns or controls a client, or on whose behalf a transaction or activity is conducted, determined in accordance with regulations 5 and 6 of the MLRs and, in the case of a body corporate, including any individual who owns or controls, directly or indirectly, more than 25 per cent of the shares or voting rights, or who otherwise exercises control over the management of the entity.
Business Relationship
A business, professional or commercial relationship between the Company and a client which arises out of the business of the Company and which is expected, at the time contact is established, to have an element of duration.
CDD
Client due diligence: the identification, verification, beneficial ownership, purpose, screening and risk-rating measures required by this Standard.
Client
Any person, body corporate, partnership, trust, foundation, governmental body, state-owned enterprise or other legal person or arrangement with which the Company establishes or proposes to establish a Business Relationship, and any prospective client under assessment.
Client File
The single, retrievable record of all CDD material, decisions, approvals, screening results and reviews held in respect of a Client.
EDD
Enhanced due diligence: the additional measures required by clause 12 where heightened risk of money laundering, terrorist financing, bribery, sanctions exposure or tax evasion is identified or presumed.
High-Risk Third Country
A country specified in Schedule 3ZA to the MLRs, together with any jurisdiction subject to a call for action or increased monitoring by the Financial Action Task Force.
MLRO
The individual appointed by the Board as the Company’s Money Laundering Reporting Officer and nominated officer, holding responsibility for the operation of this Standard, for internal reports of knowledge or suspicion, and for external reporting.
MLRs
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
PEP
A politically exposed person: an individual who is or has been entrusted with prominent public functions, including a head of state, head of government, minister, member of a legislature, senior judicial officer, senior officer of the armed forces, member of a court of auditors or of the board of a central bank, ambassador, or member of the administrative, management or supervisory body of a state-owned enterprise; together with the family members and known close associates of such an individual.
Relationship Owner
The Company officer with primary responsibility for a Client, accountable for the accuracy and completeness of the Client File and for raising escalations without delay.
Sanctions Lists
The UK Sanctions List maintained by the Foreign, Commonwealth and Development Office and the Consolidated List of Financial Sanctions Targets in the UK maintained by the Office of Financial Sanctions Implementation, together with the consolidated lists of the United Nations Security Council, the European Union and the United States Office of Foreign Assets Control where those regimes are relevant to a Client, a counterparty or a transaction.
Source of Funds
The origin of the specific funds or assets used in, or expected to be used in, the engagement or the underlying transaction, and the account or instrument from which they are drawn.
Source of Wealth
The origin of the Client’s or Beneficial Owner’s overall net worth, being the activities, events or inheritance that generated it.
Verification
The confirmation of identifying information by reference to documents, data or information obtained from a reliable source which is independent of the person whose identity is being verified.

3.Legal and regulatory framework

3.1
The Company is incorporated and registered in England and Wales and is subject to the Companies Act 2006, including the duties of directors under Part 10 and the transparency requirements of Part 21A relating to persons with significant control.
3.2
The Company adopts the standard of client due diligence set out in Part 3 of the MLRs, and in particular regulations 27 to 40, as its minimum operating standard. The Company applies that standard as a matter of policy across all of its work. Where any activity of the Company falls within the scope of the MLRs as a matter of law, the obligations in those regulations apply directly and this Standard is to be read as giving effect to them.
3.3
The principal money laundering offences under sections 327 to 329 of the Proceeds of Crime Act 2002, the terrorist property offences under sections 15 to 18 of the Terrorism Act 2000, and the corresponding disclosure and tipping-off provisions, apply to the Company and to every individual within it irrespective of regulated status. Nothing in this Standard limits those obligations.
3.4
Financial sanctions prohibitions made under the Sanctions and Anti-Money Laundering Act 2018 apply to the Company and to every person within the United Kingdom and to every United Kingdom person wherever located. It is a criminal offence to deal with the funds or economic resources of a designated person, or to make funds or economic resources available directly or indirectly to or for the benefit of a designated person. Screening under clause 10 exists to give effect to those prohibitions.
3.5
Due diligence under this Standard also discharges, in part, the Company’s obligations to maintain adequate procedures for the purposes of section 7 of the Bribery Act 2010 and reasonable prevention procedures for the purposes of sections 45 and 46 of the Criminal Finances Act 2017. Third-party risk identified under this Standard must be assessed against the Anti-Bribery and Anti-Corruption Policy (FGL-LEG-10) and the Prevention of the Facilitation of Tax Evasion Policy (FGL-LEG-12).
3.6
In respect of activity connected with Bangladesh, the Company has regard to the Money Laundering Prevention Act 2012, the Money Laundering Prevention Rules 2019, the Anti-Terrorism Act 2009, the Anti-Corruption Commission Act 2004 and the Foreign Exchange Regulation Act 1947, and to guidance issued by the Bangladesh Financial Intelligence Unit. Where the local requirement is more demanding than this Standard, the local requirement applies. Where the local requirement is less demanding, this Standard applies.
3.7
All personal data collected under this Standard is processed in accordance with the UK GDPR and the Data Protection Act 2018. Processing is carried out on the basis of compliance with a legal obligation and the legitimate interests of the Company in preventing financial crime. Where criminal offence data or special category data is processed, the Company relies on the substantial public interest condition at paragraph 10 of Part 2 of Schedule 1 to the Data Protection Act 2018 relating to the prevention and detection of unlawful acts, and maintains an appropriate policy document as required. Data subject rights are addressed in the Privacy Policy (FGL-LEG-04) and are qualified to the extent that compliance would prejudice the prevention or detection of crime.
3.8
The Company has regard to the guidance of the Joint Money Laundering Steering Group and to the Recommendations of the Financial Action Task Force in interpreting and applying this Standard.

4.Circumstances in which due diligence is required

4.1
Full CDD must be completed and approved before the Company establishes a Business Relationship with any Client. The Company does not operate a monetary threshold below which CDD is dispensed with. The occasional transaction thresholds in regulation 27 of the MLRs are treated as a statutory floor and not as the Company’s operating standard.
4.2
CDD must in addition be applied, or re-applied, where:
  • (a)the Company suspects money laundering, terrorist financing, sanctions evasion, bribery or the facilitation of tax evasion, irrespective of the value of the engagement and irrespective of any exemption that would otherwise apply;
  • (b)the Company doubts the veracity or adequacy of documents, data or information previously obtained for the purposes of identification or verification;
  • (c)there is a change in the ownership, control, senior management or ultimate beneficial ownership of the Client;
  • (d)the scope, jurisdiction, sector, counterparties or funding route of the engagement changes materially from that recorded under clause 8;
  • (e)a screening alert, adverse media finding, sanctions designation or regulatory action arises in respect of the Client, a Beneficial Owner or a material counterparty;
  • (f)the Client is introduced by, or proposes to act with, a party the Company has not previously assessed; or
  • (g)the periodic review date determined under clause 11 falls due.
4.3
Verification must be completed before the Business Relationship is established. Verification may exceptionally be completed during the establishment of the relationship only where all of the following apply: it is necessary not to interrupt the normal conduct of business; there is little risk of money laundering or terrorist financing; verification is completed as soon as practicable and in any event within ten business days; the MLRO has approved the deferral in writing in advance; and no funds are received, no counterparty introduction is made, and no external representation is undertaken in the interim. This exception is not available where the Client is rated high risk, involves a PEP or has any connection to a High-Risk Third Country.
4.4
Where the Company is engaged by an intermediary, the underlying principal is treated as the Client for the purposes of this Standard, and CDD must be completed on both the intermediary and the principal.
The controlling rule

Work does not begin because a matter is urgent, commercially attractive or politically sensitive. Work begins when the Client File is complete and approved. Commercial pressure is never a ground for deferring verification, and any attempt to apply such pressure is itself a matter to be recorded on the Client File.

5.Identification and verification of individuals

5.1
For every individual Client, and for every Beneficial Owner, director, authorised signatory and person purporting to act on behalf of a Client, the Company must obtain and record:
  • full legal name, together with any former name, maiden name, patronymic, transliterated variant or name used in another script;
  • date and country of birth;
  • all nationalities held, and details of any citizenship or residence obtained through investment;
  • current residential address and, where held for less than three years, the preceding address;
  • country of tax residence, and any second country of tax residence;
  • occupation, employer and, where relevant, the office or public function held;
  • the nature of the individual’s connection to the Client and the authority under which the individual acts; and
  • a specimen signature where the individual will give instructions to the Company.
5.2
Identity must be verified from documents, data or information obtained from a reliable source which is independent of the individual. The standard evidence set is one document from the first list below and one document from the second list below, drawn from different issuers:
  • (a)Photographic identity: a current signed passport; a current national identity card issued by a state authority; or a current photocard driving licence issued by a state authority. The document must be unexpired, must bear a photograph and, where available, a machine-readable zone or chip.
  • (b)Residential address: a utility bill, bank or credit card statement, mortgage statement, local authority or municipal tax demand, or an official communication from a tax or government authority, in each case issued in the individual’s name and dated within the preceding three months.
5.3
Where original documents are not produced in person, copies must be certified as a true copy of the original, and as a true likeness of the individual where the document bears a photograph, by a suitably qualified certifier such as a practising lawyer, notary, chartered or certified accountant, serving diplomatic or consular officer, or a regulated financial institution. The certification must state the certifier’s name, position, professional registration or licensing details, contact particulars, signature and date. Uncertified copies are not verification.
5.4
Electronic identity verification may be used where the provider draws on multiple independent data sources, incorporates document authenticity checks and a biometric liveness check where a photographic document is relied upon, and returns an auditable result. A single negative or inconclusive electronic result must be resolved by documentary evidence. Electronic verification alone is not sufficient for a Client rated high risk, for a PEP, or where a High-Risk Third Country is involved.
5.5
Where the relationship is established without face-to-face contact, at least one additional measure must be applied, such as a supervised video verification session, certified documentation obtained through an independent professional, or a corroborating record obtained from a regulated financial institution.
5.6
Where a name has been transliterated from Bengali, Arabic or another non-Latin script, the Relationship Owner must record the name in the original script where available together with each transliterated variant, and must screen every variant under clause 10. A screening result obtained against a single transliteration is not sufficient.
5.7
Where an individual cannot reasonably produce the standard evidence set, an alternative evidence route may be approved by the MLRO in writing before the relationship is established. The alternative route must achieve an equivalent degree of certainty, and the reasons for departing from the standard set must be recorded on the Client File. Inability to produce documents is never treated as a mere administrative inconvenience; it is a risk factor to be assessed.

6.Identification and verification of legal entities and arrangements

6.1
For every Client which is a body corporate, the Company must obtain and record its full legal name and any trading name; its legal form; its company or other registration number; its date and country of incorporation; the law to which it is subject; the address of its registered office and, if different, its principal place of business; the full names of the members of its board of directors or equivalent management body and of its senior management; and details of the provisions in its constitution that bind it.
6.2
Verification must be obtained from the relevant public registry or an equivalent independent source, and must include a current extract or filing history rather than a document supplied only by the Client. For entities registered in England and Wales, verification is taken from the register maintained by the Registrar of Companies. For entities registered in Bangladesh, verification is taken from the Registrar of Joint Stock Companies and Firms, supported by the certificate of incorporation, the memorandum and articles of association, the most recent Form XII in respect of directors and the most recent annual return. For entities registered elsewhere, an equivalent registry extract or a certificate of good standing issued within the preceding three months is required.
6.3
The Company must additionally obtain the constitutional documents in force, the most recent audited or, where audit is not required, management accounts, and evidence of the authority of the persons giving instructions, in the form of a board resolution, power of attorney or equivalent instrument.
6.4
At least two directors or equivalent officers, together with every authorised signatory and every individual who will instruct the Company, must be identified and verified as individuals in accordance with clause 5.
6.5
Where a Client is a company whose securities are admitted to trading on a regulated market subject to disclosure requirements consistent with Union law or equivalent international standards, the Company may apply simplified measures within the limits of regulation 37 of the MLRs, confined to verification of the listing, the identity of the persons instructing the Company, and screening under clause 10. Simplified measures may not be applied where any of the circumstances in clause 12.1 is present, and may not be applied to a subsidiary merely because its parent is listed.
6.6
Where the Company identifies a material discrepancy between the beneficial ownership information it holds and the information recorded on the register of people with significant control, the discrepancy must be reported to the Registrar of Companies as required by regulation 30A of the MLRs. Where a Client is an overseas entity holding or acquiring qualifying estates in United Kingdom land, its registration under the Economic Crime (Transparency and Enforcement) Act 2022 must be verified and any discrepancy in the register of overseas entities reported in the same manner.
6.7
For partnerships and unincorporated firms, the Company must obtain the partnership deed or equivalent agreement, the trading address, and identification of the managing partners and of every partner holding more than a 25 per cent interest in the capital, profits or voting rights.
6.8
For trusts, foundations and similar legal arrangements, the Company must obtain the trust deed, charter or equivalent constitutive instrument and must identify the settlor or founder, each trustee or council member, the protector or equivalent supervisory person, the beneficiaries or, where individuals have yet to be determined, the class of persons in whose main interest the arrangement is established, and any other natural person exercising ultimate control. Each such person must be identified in accordance with clause 5 and screened under clause 10.
6.9
For governmental bodies, state-owned enterprises and sovereign investment vehicles, the Company must record the legal instrument under which the body is constituted, the ministry or authority to which it reports, the scope of its statutory mandate, and the identity of the officials authorised to bind it. Members of the administrative, management or supervisory body of such an entity are treated as PEPs.
6.10
For non-governmental organisations, charities and other not-for-profit bodies, which carry heightened terrorist financing risk, the Company must obtain the governing document, evidence of registration with the relevant authority including, in Bangladesh, registration with the NGO Affairs Bureau where applicable, the identity of the trustees or equivalent controlling body, the principal sources of funding, and the geographic areas of operation.
6.11
Entities incorporated within the preceding twelve months, entities with no trading history, dormant entities and entities acquired off-the-shelf are treated as presenting elevated risk. In each case the commercial rationale for using a newly formed vehicle must be obtained, recorded and found to be credible before the relationship proceeds.

7.Beneficial ownership, control and layered structures

7.1
The Company must identify every Beneficial Owner and take reasonable measures to verify the identity of each of them, such that the Company is satisfied that it knows who the Beneficial Owner is. The obligation is to reach natural persons. An entity is never the answer to the question of who ultimately owns or controls a Client.
7.2
Ownership must be traced through every intervening layer, and indirect holdings must be calculated on a look-through basis by multiplying the proportionate interests along each chain. Where the same natural person holds interests through more than one chain, those interests must be aggregated.
7.3
Control must be assessed independently of shareholding. The Company must consider and record whether any natural person exercises control by other means, including through:
  • rights to appoint or remove a majority of the board or of senior management;
  • veto rights, reserved matters, golden shares or weighted voting arrangements;
  • shareholders’ agreements, side letters, option arrangements or convertible instruments;
  • nominee, trustee, custodian, fiduciary or bare-trust arrangements;
  • the provision of substantially all of the entity’s funding, or a guarantee on which the entity depends;
  • contractual arrangements conferring effective direction over the entity’s affairs; or
  • family, tribal or other informal arrangements under which a person’s instructions are habitually followed.
7.4
Where, having exhausted all reasonable means, no natural person is identified as a Beneficial Owner, the Company may treat the senior person responsible for managing the entity as the Beneficial Owner. The Company must in that case record every measure taken to identify a Beneficial Owner and the reason each was unsuccessful. This route is a documented last resort. Its use without a recorded search is a breach of this Standard, and repeated recourse to it in respect of the same Client is itself a risk indicator.
7.5
Verification of beneficial ownership is risk-sensitive. For a Client rated low or medium risk, verification may be based on registry records, audited accounts or an independently certified structure statement. For a Client rated high risk, for any PEP-connected structure, and for any structure involving a High-Risk Third Country, verification must rest on independent documentary evidence such as share registers, share certificates, registry filings, notarised declarations or audited group accounts. A written assertion by the Client as to its own ownership is never sufficient at high risk.
7.6
For layered, multi-jurisdictional or offshore structures the Company must additionally:
  • (a)obtain a full ownership and control chart, dated and signed by a director or equivalent officer of the Client, covering every entity between the Client and each ultimate natural person;
  • (b)identify and verify each intermediate entity in the chain to the standard set out in clause 6, including its jurisdiction, registration number and registered agent;
  • (c)assess the risk of each jurisdiction in the chain, having particular regard to corporate transparency, availability of ownership registers, and any listing under Schedule 3ZA to the MLRs or by the Financial Action Task Force;
  • (d)obtain and record the commercial, tax, regulatory or succession rationale for the structure, and assess whether that rationale is credible and proportionate to the complexity involved;
  • (e)identify any bearer shares, bearer warrants or freely transferable instruments and require their immobilisation, conversion to registered form or cancellation before the relationship proceeds;
  • (f)identify each nominee shareholder and nominee director, obtain the nominee agreement or declaration of trust, and identify and verify both the nominator and the person for whose benefit the nomination is held; and
  • (g)record whether any entity in the chain is a special purpose vehicle with no operational substance, and if so, what function it performs.
7.7
Complexity is not prohibited. Unexplained complexity is. Where a structure’s only discernible effect is to obscure the identity of those who own or control the Client, or to distance them from the activity, the Relationship Owner must escalate to the MLRO under clause 15 and the relationship must not proceed without the MLRO’s written approval.
7.8
The ownership and control chart must be refreshed at each periodic review and on every occasion on which the Company becomes aware of a change. The Client must be required, as a term of engagement, to notify the Company promptly of any change in its ownership or control.

8.Purpose and intended nature of the relationship

8.1
The Company must obtain and record information on the purpose and intended nature of every Business Relationship. The record must be specific to the Client and to the mandate. Generic descriptions such as “advisory services” or “investment support” do not satisfy this requirement.
8.2
The record must address, as a minimum:
  • the sector, project and specific opportunity to which the mandate relates;
  • the scope of services the Client seeks, and what the Client expects the Company to achieve;
  • the expected value of the underlying investment or transaction and the expected fee arrangement;
  • the anticipated duration of the relationship and the milestones that mark it;
  • the jurisdictions in which activity will occur and through which value will pass;
  • the identity of every material counterparty, including local partners, sponsors, contractors and intermediaries;
  • the funding route for the underlying investment, including the identity of lenders, co-investors and guarantors;
  • the public bodies, authorities or regulators whose approval the project requires; and
  • the intended exit, repatriation or realisation route.
8.3
The Relationship Owner must assess whether the stated purpose is plausible when tested against the Client’s profile, resources, track record and apparent means. Where the mandate is disproportionate to the Client’s evident capacity, or where the Client displays indifference to cost, timing or commercial outcome, the matter must be escalated to the MLRO.
8.4
The record must be written so that a reviewer with no prior knowledge of the matter can understand, from the Client File alone, what the Company was engaged to do, for whom, and why. This is the test applied in internal assurance and it is the test the Company expects to be applied by any authority that examines the file.
8.5
Any material change to the purpose or nature of the relationship requires the record to be updated, the risk rating to be reconsidered under clause 11, and, where the change moves the Client into a higher risk category, fresh approval before further work is performed.
8.6
The Company does not accept an engagement whose purpose it does not understand. Where the Client declines to explain the purpose of the relationship, or gives an explanation the Company does not find credible, the relationship must be refused under clause 14.

9.Source of funds and source of wealth

9.1
Source of Funds and Source of Wealth are distinct enquiries and both must be addressed where required. Establishing that funds arrived from a named bank account establishes the route, not the origin.
9.2
Source of Funds must be established for every Client. Source of Wealth must in addition be established for every Client rated high risk, for every PEP and for every Beneficial Owner of a PEP-connected structure, for every Client connected to a High-Risk Third Country, and wherever the Company is asked to facilitate the deployment of capital.
9.3
Corroboration must be proportionate to risk and must come from independent evidence. Acceptable evidence includes audited financial statements, tax returns and assessments, sale and purchase agreements, completion statements, dividend vouchers, share sale documentation, probate or inheritance documentation, independent valuations, loan agreements and bank statements obtained directly from a regulated institution. Where the wealth derives from a business, the Company must understand the business and satisfy itself that it plausibly generated the sums involved.
9.4
A narrative statement from the Client, unsupported by independent evidence, is not sufficient corroboration for a Client rated high risk, for a PEP, or for any sum that is material relative to the Client’s evidenced profile.
9.5
The Company does not accept fees, disbursements or any other payment in cash, in bearer instruments, or in precious metals or stones.
9.6
Payments to the Company must originate from an account held in the name of the Client at a regulated financial institution in the Client’s jurisdiction of residence or incorporation, or in a jurisdiction otherwise explained and accepted. Payments from third parties, from unrelated jurisdictions or from accounts the Company has not been told to expect must be refused or, where already received, escalated to the MLRO before the funds are applied, and must not be returned without the MLRO’s instruction.
9.7
Where a Client proposes to settle fees in crypto-assets, or where crypto-assets form part of the Source of Funds or Source of Wealth, the matter must be escalated to the MLRO before acceptance. Acceptance requires evidence of the acquisition of the assets, the identity of the exchange or custodian, and blockchain analytics confirming that the funds are not associated with sanctioned addresses, darknet markets or mixing services.
9.8
An unwillingness or inability to evidence Source of Funds or Source of Wealth to the standard required by this clause is a ground for refusal under clause 14 and requires consideration of an internal report under clause 15.

10.Sanctions, PEP and adverse media screening

10.1
Before a Business Relationship is established, and at every periodic review, the Company must screen the Client, every Beneficial Owner, every director and equivalent officer, every authorised signatory, every person instructing the Company, and every material counterparty identified under clause 8.2, against the Sanctions Lists, against PEP data, and for Adverse Media.
10.2
Screening must cover every recorded name variant, including former names, transliterations and names in original script, and must include date of birth and jurisdiction as discriminating criteria. Screening must be repeated whenever the UK Sanctions List or the Consolidated List of Financial Sanctions Targets in the UK is amended in a manner that could affect a Client, and in any event no less frequently than the review cycle set by clause 11.
10.3
Where screening produces a possible sanctions match, the Relationship Owner must immediately suspend all activity on the matter, must not make or receive any payment, must not disclose the match to the Client or to any third party, and must escalate to the MLRO the same day. Where the MLRO determines that a Client, Beneficial Owner or counterparty is a designated person, the MLRO must ensure that any funds or economic resources are frozen, that no funds or economic resources are made available directly or indirectly, and that a report is made to the Office of Financial Sanctions Implementation. Where the matter also gives rise to knowledge or suspicion of money laundering or terrorist financing, a report must be made to the National Crime Agency under clause 15.
10.4
PEP status is not, of itself, a ground for refusal. It is a risk factor. Where a Client, a Beneficial Owner or a person exercising control is a PEP, a family member of a PEP or a known close associate of a PEP:
  • (a)the relationship may only be established or continued with the approval of a member of senior management, recorded in writing with reasons;
  • (b)Source of Wealth and Source of Funds must be established and corroborated in accordance with clause 9;
  • (c)EDD under clause 12 applies in full; and
  • (d)enhanced ongoing monitoring must be applied for the duration of the relationship.
10.5
A person who has ceased to be entrusted with a prominent public function does not cease to be treated as a PEP automatically. The Company must continue to apply PEP measures for at least twelve months after the individual leaves office, and thereafter until a documented, risk-sensitive assessment concludes that the individual no longer poses a heightened risk, having regard to the seniority of the office held, the extent of continuing influence, and any Adverse Media.
10.6
Adverse Media searching must be structured and recorded. It must cover reputable news sources, court and regulatory records, insolvency records and enforcement databases, and must be conducted in English and in the principal language of the Client’s jurisdiction, including Bengali where relevant. The search terms used, the sources consulted, the date of the search and the assessment reached must all be recorded on the Client File. A nil result must be recorded as expressly as a positive one.
10.7
Where an alert is assessed as a false positive, the discounting rationale must be recorded, identifying the discriminating data relied upon. Alerts may not be closed without a recorded reason, and may not be closed by the person who has the commercial interest in the relationship proceeding.

11.Risk rating, review cycle and ongoing monitoring

11.1
On completion of CDD, every Client must be assigned a risk rating of low, medium or high. The rating must be recorded on the Client File together with the reasoning that produced it. A rating without recorded reasoning is not a rating.
11.2
The rating must take into account, as a minimum:
  • client type — whether an operating business, a holding vehicle, a special purpose vehicle, a trust, a state-owned enterprise or a not-for-profit body;
  • ownership transparency — the number of layers, the use of nominees, and the availability of public ownership records in each jurisdiction in the chain;
  • jurisdiction — of incorporation, of residence, of operations, of counterparties and of funds flow, having regard to Schedule 3ZA to the MLRs, Financial Action Task Force listings, and recognised corruption and governance indices;
  • sector — with extractive industries, public procurement, land acquisition, licensing and concession-based sectors, and defence-adjacent activity treated as presenting elevated risk;
  • political exposure — the presence of any PEP among the Client’s owners, officers, counterparties or intended beneficiaries;
  • delivery channel — whether the relationship is established face to face, remotely, or through an introducer;
  • expected activity — the value, frequency and complexity of the anticipated engagement and any associated funds flow; and
  • Adverse Media and any prior regulatory, enforcement or litigation history.
11.3
The rating determines the review cycle. A Client rated high risk must be reviewed at intervals of no more than twelve months; a Client rated medium risk at intervals of no more than twenty-four months; and a Client rated low risk at intervals of no more than thirty-six months. A review must in addition be conducted immediately upon any event listed in clause 4.2, irrespective of the date of the last review.
11.4
A periodic review must:
  • (a)confirm that all identification and verification evidence remains current and that expired documents have been replaced;
  • (b)refresh the ownership and control chart and confirm that beneficial ownership is unchanged or record the change;
  • (c)re-screen all persons required to be screened under clause 10;
  • (d)test the activity actually undertaken against the purpose recorded under clause 8 and record any divergence;
  • (e)reconsider the risk rating and record whether it is confirmed or changed; and
  • (f)be signed off by a person other than the Relationship Owner.
11.5
Ongoing monitoring is continuous and is not confined to the review date. Every individual working on a matter must scrutinise instructions, counterparties and payments for consistency with the Company’s knowledge of the Client, and must report any inconsistency to the Relationship Owner and, where clause 15 applies, to the MLRO.
11.6
A risk rating may be increased by the Relationship Owner at any time. A risk rating may only be reduced with the written approval of the MLRO, recorded with reasons.
Ratings are decisions, not labels

A high-risk rating is not a reason to decline a Client and a low-risk rating is not a reason to stop looking. The rating exists to set the depth of enquiry and the frequency with which the Company returns to it. It must be capable of being defended, on the file, on the day it was made.

12.Enhanced due diligence

12.1
EDD is mandatory in each of the following cases:
  • (a)the Client, a Beneficial Owner, a counterparty or the funds flow is connected to a High-Risk Third Country;
  • (b)the Client, a Beneficial Owner or a person exercising control is a PEP, a family member of a PEP or a known close associate of a PEP;
  • (c)the Client has been rated high risk under clause 11;
  • (d)the ownership or control structure is unusually or unnecessarily complex, or involves nominee arrangements, bearer instruments or jurisdictions without public ownership registers;
  • (e)a transaction is complex, unusually large, or follows an unusual pattern, or has no apparent economic or legal purpose;
  • (f)the relationship is established remotely without adequate safeguards, or the Client has sought anonymity or the use of an unexplained intermediary;
  • (g)Adverse Media of substance has been identified and cannot be discounted; or
  • (h)the Client, a Beneficial Owner or a counterparty is closely connected to a designated person, to an entity owned or controlled by a designated person, or to a jurisdiction subject to a comprehensive sanctions regime.
12.2
EDD requires, in addition to standard CDD:
  • independent corroboration of the identity of the Client and of every Beneficial Owner from a second, unrelated source;
  • establishment and documentary corroboration of Source of Wealth as well as Source of Funds, in accordance with clause 9;
  • obtaining and assessing additional information on the Client’s business, its principal counterparties and its ownership rationale;
  • obtaining and assessing the reasons for the intended or actual transaction, and independent evidence that the transaction is consistent with the stated purpose;
  • expanded Adverse Media searching, including litigation, insolvency, regulatory and enforcement records in each relevant jurisdiction;
  • where proportionate and lawful, a report from a reputable independent investigative firm, obtained at the Company’s instruction and not the Client’s;
  • a site visit or a supervised video meeting with the persons who own or control the Client; and
  • increased frequency and depth of ongoing monitoring, with a review cycle of no more than twelve months.
12.3
Where EDD applies, the relationship may only be established, and may only be continued, with the prior written approval of a member of senior management. That approval must record the risks identified, the measures applied, and the reasons the residual risk is considered acceptable.
12.4
EDD is performed by the Company. It may not be delegated to the Client, to the Client’s advisers, or to a party with an interest in the relationship proceeding. Material provided by the Client is evidence to be assessed, not enquiry to be relied upon.
12.5
Where EDD does not resolve the concern that triggered it, the residual risk must be treated as unmitigated and the relationship must be refused or terminated under clause 14.

13.Reliance on third parties and outsourcing

13.1
The Company may rely on CDD carried out by a third party only within the limits of regulation 39 of the MLRs and only with the prior written approval of the MLRO given in respect of that third party and that Client.
13.2
Reliance is permitted only where the third party:
  • (a)is subject to supervision for compliance with anti-money laundering requirements equivalent to those in the MLRs, and is in good standing with its supervisor;
  • (b)has consented in writing to being relied upon in respect of the specific Client;
  • (c)provides immediately, on request, all identification and verification information it holds; and
  • (d)undertakes to provide copies of the underlying documents within two business days of a request, and to retain those documents for the period required by clause 16.
13.3
Reliance never transfers responsibility. The Company remains liable for any failure to apply CDD notwithstanding that it relied on a third party. The Relationship Owner must review the material received and form the Company’s own view; adopting another firm’s conclusion without reviewing its basis is a breach of this Standard.
13.4
The Company does not rely on a third party established in a High-Risk Third Country, on a third party it has not assessed, or on a party that has an economic interest in the relationship being accepted.
13.5
An introducer certificate, a comfort letter or a statement that “due diligence has been completed” is not verification and does not constitute reliance for the purposes of this clause.
13.6
The Company may outsource the administrative collection, storage and initial screening of CDD material to a service provider under a written contract that specifies the standard to be applied, guarantees the Company access to all records, permits audit, and complies with the Company’s obligations under the UK GDPR and the International Data Transfer Statement (FGL-LEG-07). Outsourcing of administration is not reliance. The assessment, the risk rating and the acceptance decision remain with the Company in every case.
13.7
Where the Company acts alongside or is introduced by another professional firm, the Company forms its own view of the Client. A relationship of long standing between the Client and the introducer is not a substitute for evidence.

14.Refusal, suspension and exit

14.1
Where the Company is unable to complete CDD to the standard required by this Standard, it must not establish the Business Relationship, must not carry out any transaction, must terminate any existing relationship, and must consider whether an internal report under clause 15 is required.
14.2
A relationship must be refused, or terminated if already established, where:
  • (a)the Client, a Beneficial Owner or a material counterparty is a designated person, or is owned or controlled by a designated person, and no licence is held permitting the activity;
  • (b)the Client refuses or fails to disclose its beneficial ownership, or the ownership chain cannot be resolved to natural persons;
  • (c)documents provided are found to be false, forged, altered or materially misleading;
  • (d)the purpose of the relationship is unlawful, or would involve the Company in bribery, the facilitation of tax evasion, sanctions circumvention or the concealment of criminal property;
  • (e)the Client requires anonymity from the Company, refuses to permit screening, or seeks to place conditions on the Company’s enquiries;
  • (f)Source of Funds or Source of Wealth cannot be established to the standard required by clause 9;
  • (g)the structure appears designed principally to obscure ownership, control or the origin of funds, and no credible alternative rationale is provided; or
  • (h)the Client seeks to procure a decision, approval, licence or permission from a public body by improper means.
14.3
The Company may in addition decline or exit a relationship on discretionary grounds, including where the mandate is inconsistent with the ESG and Responsible Business Policy (FGL-LEG-16), where a conflict of interest cannot be managed under the Conflicts of Interest Policy (FGL-LEG-13), or where the Company judges the reputational risk to be unacceptable. The Company is not obliged to give reasons for a discretionary refusal.
14.4
Exit must be orderly and must be conducted in a manner that does not prejudice any investigation. Before notifying a Client of termination, the Relationship Owner must obtain the MLRO’s confirmation that notification will not constitute an offence of tipping off. Where an internal report has been made, no step may be taken without the MLRO’s instruction.
14.5
Termination does not discharge the Company’s reporting, record keeping or confidentiality obligations, which continue in accordance with clauses 15 and 16.
14.6
Refusal and termination decisions under clause 14.2 are made by the MLRO and not by the Relationship Owner. The decision, the grounds for it and the date must be recorded and retained, and the Client must be recorded so that any subsequent approach is identified.

15.Escalation and internal reporting

15.1
Any individual who knows or suspects, or who has reasonable grounds to know or suspect, that a person is engaged in money laundering, terrorist financing, bribery, sanctions evasion or the facilitation of tax evasion, must make an internal report to the MLRO as soon as is practicable. The obligation arises on suspicion; it does not require proof, and it is not for the reporter to investigate first.
15.2
An internal report must be made in writing, must set out the facts giving rise to the suspicion, and must be made directly to the MLRO. It must not be discussed with the Client, with the person who is the subject of the report, or with colleagues who do not need to know.
15.3
The MLRO shall consider each internal report, shall have access to all relevant information held by the Company, and shall decide whether a disclosure is required to the National Crime Agency. Where the Company’s continued involvement would risk a prohibited act, the MLRO shall seek a defence against money laundering before any further step is taken, and no further work may be performed until consent is obtained or the applicable statutory period has expired.
15.4
The MLRO’s decision, and the reasons for it, must be recorded whether or not an external disclosure is made. A decision not to disclose is as significant a record as a decision to disclose.
15.5
No person may disclose to the Client, or to any other person, that an internal or external report has been made, or that an investigation is being or may be carried out, where that disclosure is likely to prejudice the investigation. Tipping off is a criminal offence under section 333A of the Proceeds of Crime Act 2002 and section 21D of the Terrorism Act 2000.
15.6
A person who makes an internal report in good faith is protected. The Company will not tolerate any detriment, retaliation or disadvantage in consequence of a report, and any such conduct is a disciplinary matter. Concerns about the operation of this Standard itself, including any concern that a Client has been accepted improperly, may be raised through the Whistleblowing and Speak-Up Policy (FGL-LEG-14).
15.7
Where a matter arises in connection with Bangladesh, the MLRO shall additionally consider whether a report is required to the Bangladesh Financial Intelligence Unit or to any other competent authority, and shall take local legal advice where the reporting obligations of the two jurisdictions may conflict.

16.Record keeping, governance and assurance

16.1
The Company must maintain a single Client File for each Client containing all identification and verification evidence, the ownership and control chart, the record of purpose, Source of Funds and Source of Wealth material, all screening results and discounting rationales, the risk rating and its reasoning, all approvals, all periodic reviews, and all correspondence relevant to acceptance and continuation.
16.2
Records must be retained for five years beginning on the date on which the Business Relationship ends or, in the case of a discrete transaction, on the date the transaction is completed. At the end of that period personal data must be deleted unless the Company is required to retain it by another legal obligation, it is required for legal proceedings, or the data subject has consented to longer retention. Retention periods for all other categories of record are set out in the Data Retention and Records Management Policy (FGL-LEG-06).
16.3
Records must be capable of being retrieved and reconstituted so that the Company can demonstrate, to any competent authority, what it knew about a Client, when it knew it, and on what basis it decided to proceed. Records must be held securely, with access limited to those who need it, and must be protected against unauthorised access, alteration and loss.
16.4
Where CDD records are held or accessed outside the United Kingdom, including in Bangladesh, transfers are made only under the safeguards described in the International Data Transfer Statement (FGL-LEG-07).
16.5
The Board is accountable for this Standard. The MLRO is responsible for its day-to-day operation, for maintaining the Company’s risk assessment, for approving departures where this Standard permits them, and for reporting to the Board at least annually on the operation of the Standard, the volume and outcome of escalations, and any weaknesses identified.
16.6
Every individual to whom this Standard applies must complete training on it before commencing work on any Client matter and at least annually thereafter. Training records must be retained, and completion is a condition of continued access to Client matters.
16.7
The operation of this Standard is subject to independent testing at least annually, covering a sample of Client Files across each risk rating. Findings are reported to the Board with remediation actions, owners and deadlines, and the closure of each action is verified.
16.8
This Standard is reviewed at least annually and additionally whenever there is a material change in the law, in the Company’s risk assessment, or in the sectors or jurisdictions in which the Company operates. The version date shown at the head of this document is the date from which the current version applies.
Enquiries and requests

Questions about this Standard, requests from clients or counterparties about the information the Company requires, and requests by individuals in relation to personal data processed for due diligence purposes should be submitted through the enquiry form at fratresgroup.com/contact, marked for the attention of the Money Laundering Reporting Officer. Enquiries are acknowledged within five business days.

The Company may be unable to confirm or deny whether a report has been made in respect of any person, and may be required to withhold information where disclosure would prejudice the prevention or detection of crime. A complaint about the handling of personal data may be made to the Information Commissioner’s Office, and a complaint about the Company’s conduct may be made under the Complaints Handling Procedure (FGL-LEG-17).

Related policies
Anti-Money Laundering & Counter-Terrorist Financing PolicyFGL-LEG-08Anti-Bribery & Anti-Corruption PolicyFGL-LEG-10Sanctions & Export Controls PolicyFGL-LEG-11Prevention of the Facilitation of Tax Evasion PolicyFGL-LEG-12
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