If you’re not working with these clients on a regular basis you’ll want to be sure that, when you do work with one, you’re effectively reviewing their documentation, such as international passports, overseas incomes and stocks and shares.
When it comes to identifying fraudulent applications, banks such as ourselves will have additional checks and controls to prevent fraud, but there are still measures you can take.
Types of fraud
It is not just forged documentation brokers need to be watchful for but also fraudsters stealing a client’s identity or that of a third party involved in the transaction.
A client’s wealth does not make them exempt from financial crime and in some ways, it can make them more susceptible. In 2016, Experian cited the ‘cash-rich city prosperity segment’ as the most at-risk demographic when it comes to identity theft.
Third parties may also be at risk, such as solicitors and agents. If a fraudster is able to infiltrate their cyber security, they may be able to impersonate them.
In such a scenario, a fraudster might contact the client over email shortly before the deposit for a property is due, claiming to be the solicitor or bank and request the money is paid into a different account, i.e., their own. In the era of almost instant payments, that money will be lost immediately.
This is one of the reasons why Investec Private Bank does not allow dual representation and all of our clients are required to use one of our select network of London law firms.
What can brokers do?
HNW clients often have more public exposure and as a result you may be able to carry out an initial check of the client online, viewing aspects of their finances such as their company accounts via Companies House or how long their business has been trading. You may even be able to access a photo of the client, which emphasises the importance of meeting face-to-face.
Online resources can be very useful when it comes to detecting a fraudulent application, especially a high-net worth case. Websites like the EU’s Public Register of Authentic travel and identity Documents (PRADO), for example, can be useful for confirming a passport’s authenticity.
When it comes to the client’s documentation, it may be difficult to ascertain the legitimacy of foreign paperwork which is why these additional checks are worth the extra effort.
For example, are there any irregularities in the documents? And if they’re copies, are you able to compare them against the originals?
When viewing bank statements, do they match with what the client is telling you when cross-referenced with their payslips? And are their outgoings what you would expect to see from a high net worth professional?
Appearances can often be deceptive which is why if you have any doubts about a client, it is best to proceed with caution and not be blind-sided by their perceived wealth.