Excise Due Diligence Policy – URN XMAW00000121706
Date of Issue: 26 November 2024
1. Purpose
East Link is engaged in the import and distribution of alcohol in the UK. This Due Diligence policy outlines East Link’s approach to ensure compliance with HMRC requirements under the Alcohol Wholesaler Registration Scheme (AWRS). The purpose of this policy is to mitigate the risk of engaging with illegitimate businesses, reduce exposure to duty fraud, and maintain the integrity of the UK alcohol supply chain.
2. Scope
This policy applies to our suppliers, our wholesale and retail distributors, and third-party businesses involved in transactions related to the sale, purchase, and distribution of alcoholic beverages in the UK.
3. Roles and Responsibilities
- Appointed Company directors and Compliance officer: Enforce the policy, oversee due diligence checks, and maintain records of due diligence actions.
- Employees: Understand and adhere to the policy, report concerns promptly, and support due diligence activities as needed.
4. Due Diligence Code of Conduct (DDCOC)
DDCOC sets out the basic rules we will follow and the values that will guide our decisions. It also points us to more detailed processes and procedures relating to the purchase and supply of alcoholic products.
The DDCOC is built on the premise of ‘knowing your customer or supplier‘ and the commercial transactions that will be involved. It helps identify and prevent illicit transactions. Customers and suppliers are subject to regular reviews to detect any changes in activities.
Specific guidelines have been developed for customers and suppliers. All customers and suppliers must provide the required list of documents and completed questions for East Link to undertake a risk assessment before any account is opened. Any customers identified as high risk will undergo further questioning before we decide if we will begin to trade. East Link will only trade with a customer or supplier if they have passed the necessary risk assessment checks. High-risk customers that are accepted will be evaluated every three months, all other customers will be reviewed on annual basis.
All customers who do not pass the internal check will be notified that their account will not be opened and customers with suspicious behaviour will be reported to HMRC within 5 working days.
Transactions with suppliers or customers who failed the risk assessment will be immediately suspended until a review is completed. Reviews of supplier and customer information will be conducted regularly, with records maintained.
The DDCOC will be implemented and maintained by appointed officer who has experience working with East Link customers, suppliers and methods of business.
Part of the DDCOC is to ensure day-to-day checks are in place to identify transactions that may lead to fraud or involve goods on which duty may have been evaded. Checks in purchase order processing and customer orders are two areas where daily checks are performed.
4.1 Supplier Due Diligence
We undertake the following checks and documentation requirement as part of supplier due diligence process:
Checks
- Validate AWRS Unique Reference Number (URN) via HMRC’s online look-up service for suppliers if this has been issued in the UK.
- Verify that the supplier is registered with Companies house and review their registration information.
- Review the supplier’s financial health using credit checks and evaluate any significant risks.
- Check for any historical compliance issues with HMRC or known legal disputes related to duty fraud or other relevant violations.
- Collect copies of relevant licences, VAT certificates and proof of identity for key directors or authorised representatives.
- Classify suppliers as high, medium, or low risk based on collected information. Higher risk suppliers will undergo more frequent reviews and audits.
Document request
- Company introduction stating nature of business and products available
- Copy of Incorporation Certificate
- Copy of VAT Certificate
- Copy of company’s last filed set of accounts
- Shareholder and Director’s ID details
- Copy of business utility bill (less than 3 months old)
- Headed paper complete with director’s signature
- AWRS number if this has been issued
- For UK duty paid supplier, copies of form W-5 or similar document showing evidence of duty payment
- Fill the AWRS Supplier Registration Form
4.2 Customer Due Diligence (Retailer)
We undertake the following checks and documentation requirement as part of customer due diligence process:
Checks
- Confirm that all retail customers are registered with a Premises Licence which is displayed and valid.
- Obtain and retain key identification information, including Incorporation certificate, VAT certificate, relevant licences, owner/director photo ID details, proof of business address and signed account form.
- Monitor sales pattern to detect unusual or high-volume purchases that may indicate duty fraud risks.
- Review payment methods and sources, ensuring payments are consistent with the customer’s usual business activities.
- Continuously monitor customers’ compliance and periodically reassess due diligence checks.
Document request
- Company introduction stating nature of business and products available
- Copy of Incorporation Certificate
- Copy of VAT Certificate (if applicable)
- Company bank details
- Owner/Director’s ID details
- Copy of business utility bill (less than 3 months old)
- Copy of Premise Licence, or other relevant licences
- Fill the AWRS Account Registration Form
4.3 Customer Due Diligence (Wholesaler)
We undertake the following checks and documentation requirement as part of wholesaler due diligence process:
Checks
- Confirm that all wholesale customers are registered with AWRS as required by HMRC, and verify their URN.
- Obtain and retain key identification information, including Incorporation certificate, VAT certificate, relevant licences, owner/director photo ID details, proof of business address and signed account form.
- Monitor sales pattern to detect unusual or high-volume purchases that may indicate duty fraud risks.
- Review payment methods and sources, ensuring payments are consistent with the customer’s usual business activities.
- Continuously monitor customers’ compliance and periodically reassess due diligence checks.
Document request
- Company introduction stating nature of business and products available
- Copy of Incorporation certificate
- Copy of VAT Certificate
- Company bank details
- Owner/Director’s ID details
- Copy of business utility bill (less than 3 months old)
- AWRS number
- Fill the AWRS Account Registration Form
5. FITTED Checks
This section of our due diligence policy applies to verifying suppliers and customers using HMRC’s FITTED criteria. Implementing FITTED checks will help East Link identify potential risks in transactions and avoid involvement with illicit or non-compliant businesses.
FITTED stands for Finance, Identity, Trade, Transport, Existence, and Due Diligence. These categories outline core factors to assess when verifying new and existing business relationships in the alcohol wholesale trade.
5.1 Finance
- Conduct credit checks on suppliers and customers to assess financial health.
- Analyze transaction payments to confirm they align with industry norms and detect unusual or inconsistent payment behaviour.
- Review sources of funding where possible, especially for large or irregular transactions, to verify the legitimacy of payments.
5.2 Identity
- Verify business details, such as the company’s registration with Companies House, VAT registration, and AWRS URN.
- Obtain and confirm identities of key directors, partners, or owners using government-issued IDs or other official documents.
- Check and verify contact information, including addresses, phone numbers, and email addresses, ensuring they are consistent with official records.
5.3 Trade
- Assess the products and volumes traded to ensure they are consistent with normal trade for that business.
- Scrutinise product pricing for unusually low prices, which may indicate the risk of duty fraud.
- Regularly monitor transaction patterns for inconsistences or unusual behaviour that could indicate a risk of fraud.
5.4 Transport
- Verify logistics details, including delivery locations and frequency, to identify potential red flags in the supply chain.
- Ensure that any third-party logistics companies are reputable and that there is adequate documentation for transport arrangements.
- Compare transport costs with industry norms, as unusually low rates can signal potential involvement in illicit activities.
5.5 Existence
- Conduct periodic visits to verify that the supplier or customer operates from a legitimate business address.
- Evaluate the premises to confirm they align with the business’s trading profile and capacity (e.g. storage facilities, office space.)
- Check for signs of active trading, such as online presence, customer reviews, or physical evidence of operations.
- Get sufficient detail to ensure that the goods are duty-paid.
5.6 Deal
- Assess if the transaction appears too favourable, especially when incentives are included, and compare prices with competitors to ensure they align with realistic market expectations.
- Scrutinize product origins, especially for UK-labelled alcohol that originated abroad, and investigate any unusually aged stock to confirm its legitimacy and origin.
- Regularly review business correspondence and documentation for any changes in established agreements, and take follow up actions as necessary to maintain compliance and consistency.
Each FITTED criterion will be applied in onboarding new suppliers and customers and as part of ongoing due diligence reviews. This includes:
- Initial due diligence: each new supplier and customer undergoes FITTED checks before any business transactions.
- Ongoing monitoring: FITTED checks will be revisited periodically, especially for high-risk suppliers or customers.
- Escalation and reporting: any red flags identified during FITTED checks will be escalated to the Compliance Officers and if necessary, reported to HMRC.
6. Record-keeping
East Link London Ltd is committed to maintaining accurate and up-to-date records of all due diligence activities. Detailed records of FITTED checks will be maintained for each supplier and customer. This includes verification of licences, VAT numbers, AWRS URNs, documentation of any identified risks, mitigation actions, outcomes, transaction and payment history that reflects regular monitoring of financial behaviour. Records will be retained for 6 years, in line with HMRC requirements.
7. Training and Awareness
All relevant employees will receive annual training on due diligence practices and procedures, including the identification and reporting of suspicious activity. Training records will be maintained to ensure compliance with HMRC requirements.
8. Risk Management and Reporting
East Link will conduct periodic audits of this policy and report any suspicious activity related to duty fraud to HMRC. Our Compliance Officer will ensure that risk assessments are current and that all due diligence processes are consistent with HMRC's guidelines.
9. Policy Review
This policy will be reviewed annually or in response to regulatory updates to ensure ongoing compliance with AWRS and HMRC requirements.