Why Financial Planners and Investment Advisers are exposed to financial crime risk
Financial Planners and Investment Advisers play a trusted role in helping individuals and families manage wealth, plan for retirement and invest for the future. They often operate at the intersection of personal relationships, financial decision making and product distribution. While the sector is typically lower risk than wholesale banking, it is not immune to financial crime.
Money laundering risk in financial planning and advisory services is often driven by client relationships, the use of investment products and the movement of funds between accounts. Advisers may be targeted by criminals seeking to legitimise illicit funds through seemingly ordinary investment activity.
For Money Laundering Reporting Officers (MLROs) and senior compliance leaders in this sector, the challenge is no longer simply to satisfy minimum regulatory obligations it is to demonstrate a deep, defensible and evidence-based understanding of financial crime risk that withstands regulatory review, supports investment and client acceptance decisions and drives proportionate, risk-aligned control execution.
Arctic Intelligence’s ML/TF/PF Risk and Control Assessment Solution has been developed specifically for Financial Planners and Investment Advisers. It supports them in meeting regulatory expectations, providing a structured, evidence-based, regulator-ready framework that empowers teams to identify, assess and govern financial crime risk across every line of business.
Why Financial Planners and Investment Advisers are targeted by organised criminal networks
Financial Planners and Investment Advisers are inherently exposed to financial crime risk for several reasons:
- Trusted Gatekeeper Role to the Financial System: Advisers act as trusted intermediaries between clients and financial institutions, making them attractive gateways through which illicit funds can be introduced into managed investment products, platforms and portfolio structures under the appearance of legitimate financial planning activity.
- Access to Broad Investment Platforms and Products: Advisers routinely facilitate client access to managed funds, wrap platforms, superannuation, insurance, annuities, private investments and alternative assets, providing multiple pathways for layering and integrating illicit funds if not properly governed.
- Complex Client Structures and Beneficial Ownership Risk: Advisory relationships often involve family trusts, SMSFs, private companies and nominee arrangements that can obscure beneficial ownership, source of funds and economic purpose.
- Cross-Border Client and Investment Exposure: Clients may hold offshore assets, invest in international markets or receive funds from overseas sources, increasing exposure to high-risk jurisdictions, sanctions regimes and proliferation financing corridors.
- High-Value, Event-Driven Transactions: Advisory firms regularly handle large lump-sum investments, rollovers, redemptions and pension commencements, creating low-frequency but high-value transaction risk profiles.
- Use of Referrers and Professional Introducers:Accountants, lawyers, mortgage brokers and other referrers may introduce clients and capital with variable levels of verification and transparency.
- Digital Advice Platforms and Outsourced Service Providers: Wrap platforms, robo-advice tools, digital onboarding portals and outsourced administration providers create additional entry points for illicit funds and potential control fragmentation if not governed through integrated AML/CTF frameworks.
Taken together, these features make Financial Planners and Investment Advisers a primary target for organised criminal networks and place enterprise-wide, evidence-based ML/TF/PF risk assessment at the centre of regulatory expectations.
Introducing Arctic Intelligence’s ML/TF/PF Risk and Control Module for Financial Planners and Investment Advisers
Arctic Intelligence’s Financial Planners and Investment Advisers Risk and Control Module provides a comprehensive and configurable foundation for conducting robust, enterprise-wide ML/TF/PF risk assessments tailored to these sectors.
This module enables Financial Planners and Investment Advisers to:
- Identify and Prioritise ML/TF/PF Risks: Using adviser-specific risk taxonomies aligned to FATF and supervisory expectations, the module guides financial planning and advisory firms through identifying the highest-impact risk areas across client profiles, beneficial ownership structures, superannuation and investment products, advice and onboarding channels, transaction and rollover flows and geographic exposures.
- Assess Controls and Operational Effectiveness: Moving beyond static compliance checklists, the solution maps controls to real advisory risk drivers and enables testing of both design and operational effectiveness allowing firms to demonstrate, with evidence, that controls are operating as intended.
- Calculate Residual Risk Transparently: Residual risk reflects a firm’s true financial crime exposure. Arctic’s module aggregates inherent risk indicators with control performance data to produce defensible residual risk ratings that are directly aligned to risk appetite, escalation thresholds and governance frameworks.
- Produce Audit-Ready Documentation: Built-in audit trails, version history, review workflows and aggregated reporting provide regulators, internal audit and senior management with transparent, evidence-based documentation explaining how financial crime risk conclusions were reached and governed.
This solution embeds specific typologies, regulatory best practice and global risk methodologies into a scalable, configurable risk and control platform that supports consistent application across business lines, geographies and legal entities.
The built-in audit trail, review logs and Board-ready reporting enable stronger governance oversight while making complex risk outcomes digestible for executives and boards.
Who does this module apply to?
The money laundering, terrorism and proliferation financing risk and control module contains a library of risks, controls and control tests designed specifically for different types of Financial Planners and Investment Advisers:
| Certified Financial Planners | Private Client Advisers |
| Estate Planning Advisors | Registered Investment Advisers |
| Financial Advisory Firms | Retirement Planners |
| Financial Planners | Wealth Planners |
| Independent Financial Advisers |
What does this module contain?
A. Enterprise-wide ML/TF/PF risk assessment, covering the following risk groups:
- Environmental Risk – covering exposure to internal and external risk indicators.
- Customer Risk – covering customer base profile, customer location risk, legal form risk, industry / occupation risk, PEP risk and customer activity risk.
- Product and Services Risk – covering the services provided by Financial Planners and Investment Advisers that are subject to AML/CTF laws and the inherent risk characteristics of each of these.
- Channel Risk – covering face-to-face and non-face-to-face customer onboarding and transaction channels.
- Transaction Risk – covering higher risk transaction types.
- Country Risk – covering higher risk country risk exposures based on the residency, nationality or citizenship (Individuals) and country of registration, incorporation, domicile or operations (Entities).
These modules also include a comprehensive library of suggested controls and control tests to support design and operational effectiveness testing.
Financial Planners and Investment Advisers can deploy the content module out-of-the-box or tailor it to their methodology, eliminating the need to start from scratch while maintaining full ownership of their risk model. It also allows firms to import their own risk indicators and controls or enhance the expert-built libraries to suit their bespoke risk methodology and regulatory environment.
B. Product and Services ML/TF/PF risk assessment module, covering over 15 different products and services, with inherent ML/TF/PF risk attributes of each over the following risk groups:
- Investment and Wealth Management Products – Administrator Services, Asset Management, Discretionary Portfolio Management, Estate Planning, Family Trusts, Financial Planning, Philanthropy and Charitable Trust Management and Private Banking.
- Investment Products – covering Capital Investments, Investment Funds and Unit Trusts.
C. Channel ML/TF/PF risk assessment module, covering over 30 different inherent ML/TF/PF risk attributes of each over the following risk groups:
- Face-to-Face Channels – covering Internal Physical Channels; Relationship Managed Physical Channels and External Physical Channels.
- Non-Face-to-Face Channels – covering Internal Remote Assisted Channels; Internal Manual Channels; Internal Digital Self-Service Channels; Internal Programmatic / Embedded Access Channels; External Interbank and Payment Infrastructure Channels and External Digital Channels.
- Face-to-Face or Non-Face-to-Face Channels – External Partner Intermediary Channels.
- Customer Onboarding Channels (General) – Channel type; onboarding through face-to-face channels and non-face-to-face channels and customer onboarding through intermediaries.
- Transaction and Delivery Channels – Value of transactions by delivery channel type.
- General Channel Risks – Higher channel risk indicators.
Get started with Arctic Intelligence
Whether you are establishing your first enterprise-wide ML/TF/PF risk assessment or upgrading a legacy spreadsheet-based program, Arctic Intelligence’s Financial Planners and Investment Advisers Risk and Control Module is a scalable, defendable and configurable solution that meets the needs of modern compliance teams.
Book a demo or contact us to explore how our platform can help your business strengthen compliance, mitigate financial crime risk and build a risk program that stands up to regulatory scrutiny.
Or visit our website to learn more.
