There are several considerations for you to think about in looking to hold client money within an unregulated firm. These include:
- Money Laundering Regulations 2017
- Fraud and cyber-attacks
- Compensation Arrangements
- Financial compliance
- Banks only dealing with regulated firms
You must ensure that you comply with the Money Laundering Regulations 2017. An unregulated firm will need to comply with the Regulations if, for example, they:
- Hold client money as part of a transaction (i.e. estate administration)
- Open new companies for clients
- Create or manage trusts
If you do decide to hold client money, you need to be aware that some banks will exercise caution in whom funds are released to. The absence of regulation may be a barrier.
We would recommend you refer to the CILEx Accounts Rules as we believe compliance with these Rules is good practice for all firms holding client money. We have provided specimen client account reconciliation forms to assist you in managing client money.
- AML section for further guidance on anti-money laundering
- Further information on who the Money Laundering Regulations apply to
- Risk section provides guidance on how you might look to protect yourself against fraud and cybercrime