Third Party Reliance Testing for Agents/Nominees and Eligible Introducers (2022-05-19)

Summary

This is a CIMA supervisory information circular, dated 19 May 2022, reminding all regulated entities of their existing obligations regarding third-party reliance testing when relying on agents/nominees (including nominee investors) or eligible introducers (EIs) for customer due diligence purposes under Regulations 24 and 25 of the Anti-Money Laundering Regulations (2020 Revision) (AMLRs) and the related Guidance Notes.

• Eligible Introducers (Regulation 25): Where a regulated entity relies on an EI, it must conduct third-party reliance testing to confirm the EI has actually performed the requisite customer due diligence and can produce it on request.
• Nominees (Regulation 24): Where a regulated entity relies on a person acting as a Nominee, it must obtain a written assurance from that Nominee (in the required form) and also conduct reliance testing, with the Nominee confirming it will provide identification/verification data on request without delay.

The Authority stresses that without such testing, neither CIMA nor the regulated entity can be satisfied that adequate CDD has been performed or that the underlying data can be produced on request, and in that case the entity should reassess whether continued reliance on Regulations 24 or 25 is appropriate. Importantly, the circular reiterates that ultimate responsibility for AML/CFT customer due diligence compliance always remains with the regulated entity, even when relying on an EI or Nominee, per Regulations 24(3) and 25(3).

This is essentially a reminder/reiteration of existing regulatory requirements rather than a new rule; it does not introduce new deadlines or transition periods, but it does restate binding obligations that regulated entities must continue to observe.

Key obligations

• Regulated entities must conduct third-party reliance testing when relying on an eligible introducer (EI) under Regulation 25 of the AMLRs.
• Regulated entities must obtain a written assurance in the form required by Regulation 24 of the AMLRs from any person acting (or appearing to act) as a Nominee (including nominee investors) for a principal, and must also conduct third-party reliance testing on that Nominee.
• The written assurance obtained from a Nominee must confirm the Nominee will provide copies of identification and verification data obtained for CDD purposes to the regulated entity on request and without delay.
• Where reliance testing cannot confirm the EI or Nominee has conducted adequate CDD and can produce it on request, the regulated entity must determine whether it is still appropriate to continue relying on Regulations 24 or 25.
• Regulated entities retain ultimate responsibility for compliance with CDD requirements under the AMLRs even when relying on an EI or Nominee, per Regulations 24(3) and 25(3).

Applies to

regulated entities