When reliance isn't compliance: a classic AML pitfall

The Arian Financial case underscores that third-party customer due diligence is not a shortcut. Firms must take active steps to ensure that outsourced checks meet regulatory standards and align with their risk-based frameworks, as well as get to the bottom of any concerns. By David Hamilton

David Hamilton (david.hamilton@howardkennedy.com) is a partner with Howard Kennedy. A white-collar and regulatory lawyer with significant experience advising on bribery, fraud, money laundering and market manipulation matters, he has a specialism in financial services enforcement and compliance.

In November 2024, the Upper Tribunal issued its judgment in Arian Financial LLP v the Financial Conduct Authority [1]. The judgment addressed a decision notice issued by the Financial Conduct Authority in August 2022, which found that Arian Financial LLP (Arian) had breached Principles 2 and 3 of the FCA's Principles for Businesses (PRIN).