A Client Arrives at a Meeting with a Companion – Is There Something Wrong or Risky?

In practice, various situations often arise where accounting clients draw increased attention during the evaluation of their transactions and fail to assess risks before conducting them, or create situations that necessitate intensified evaluation, which we strive to address by first discussing the situation with the client and attempting to find an internal solution. What are the 10 most common situations in practice:

• A client arrives at a meeting at the accountant’s office to explain the specifics of their business activities with a previously unknown companion who takes the initiative during the conversation and speaks more than the client, explaining business nuances better than the client and providing contradictory information regarding the nature of the transactions;
• A client has conducted a one-off transaction that differs sharply from their usual business activities, necessitating registration as an AML subject, but this is not done;
• The compensation received as a result of this one-off transaction is ten times the market value within a normal business cycle between independent market participants;
• A client receives a payment from third countries on behalf of their own client for services rendered, without any apparent justification;
• A client receives several small payments from their own client within a short period, which are immediately transferred to a third party;
• A client provides a significant loan to their own company without an apparently clear source of funds, as the client’s only source of income is a minimum wage from their company;
• A client operates with significant losses over a long period but, at the same time, lends substantial funds to their own company from an unclear source;
• An order was placed with the client under a multi-year contract by a company indirectly controlled by the state of Belarus. The order was placed at the end of 2021. In 2022, the client is unable to fulfill this order due to the sanctions regime, as the completed order cannot be shipped to the buyer;
• A thriving construction company has ordered “management consultations” for 100,000 EUR from a UK-resident company without any tangible results;
• An advance payment was made to an Estonian-resident company for the delivery of materials that have not been physically received for more than six months, and whose ultimate beneficial owner and board member owns a small auto repair shop in Ķengarags;

If you require a preventive consultation to assess these or similar risks to avoid unpredictable business situations, or if you need daily support with bookkeeping, please contact us right here on our website, and our team will be ready to assist you.