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HMRC internal manual

International Exchange of Information Manual

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HM Revenue & Customs
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Due Diligence: General Requirements: Reliance on Service Providers

Due Diligence: General Requirements: Reliance on Service Providers

Reporting Financial Institutions may use third party service providers to fulfil some or all of their due diligence obligations under the various automatic exchange of information regulations (FATCA, CDOT, CRS and DAC) but the obligations remain the responsibility of the Financial Institution. Any failure by a third party service provider would be regarded as a failure by the Financial Institution.

For example, where an independent financial adviser (IFA) has the customer relationship for introducing business to a Financial Institution, such as a broker selling Cash Value Insurance Contracts, the IFA is often best placed to obtain the self-certification [see IEIM403340] needed to carry out the due diligence process on the new account. The Financial Institution may rely on the IFA to obtain the self-certifications on its behalf.

Similarly, when a Financial Institution engages a third party to run AML/KYC processes [see Money Laundering Regulations: introduction - Detailed guidance - GOV.UK] it may rely on the report provided on the basis that the third party has relied on appropriate documentary evidence [see IEIM403490] in producing the report. In such a case the reporting Financial Institution may not hold the original documents or certified copies of them. If HMRC requires sight of documents in these circumstances, photocopies will be acceptable subject to the Financial Institution being able to obtain originals or certified copies should that be necessary.