Why one client is usually five records
Ask an accountant how many clients they have and they will give you a number. Ask how many entities they act for and the number is often three or four times larger. Under Tranche 2, the second number is the one that matters.
This page is about the structure problem, not about any product. If you are working out what AML compliance will actually cost your practice in hours, this is where the hours are.
A completely ordinary client
The Smiths are one client in your practice management system and one line on your fee schedule. Here is what they actually are.
| Record | Type | What due diligence requires |
|---|---|---|
| Smith Investments Pty Ltd | Company | Verify the company, identify who owns or controls 25% or more, verify each of them |
| The Smith Family Trust | Trust | Verify the trust, the trustee, the appointor, and the classes of beneficiary |
| Smith Super Fund | SMSF | Verify the fund and each member and trustee |
| John Smith | Individual | Verify identity. Director, appointor, member — three roles, one person |
| Mary Smith | Individual | Verify identity. Director, beneficiary, member |
Five records. Nine roles across them. And the roles are the point — John is a director of the company, the appointor of the trust and a member of the fund, and each of those makes him relevant for a different reason.
The shape of the problem
What a compliance check produces for the Smiths is not a result. It is a structure — five entities and the relationships between them, where the relationships carry as much of the compliance meaning as the entities do.
Knowing that John Smith passed an identity check tells you almost nothing. Knowing that John Smith passed an identity check and is the appointor of the trust that owns 60% of the company you are acting for is the actual compliance position. Strip the relationship out and you have kept the easy half.
This is why AML sits awkwardly on top of most software. Practice systems were built to model who you bill. Due diligence needs to model who controls what. Those are different graphs over the same people.
Where the hours actually go
Firms budget for the checks. The checks are the cheap part — they are fast, they are automated, and they are priced per unit so the cost is visible. The expensive part is invisible because it is staff time:
- Working out the structure before you can verify anything. Someone has to read the trust deed and the ASIC extract and decide who is in scope.
- Re-keying each entity into whatever tool does the checking, then re-keying the outcome back into the practice system.
- Rebuilding the relationships by hand, because most tools return five unrelated results and the connections existed only in the head of whoever did the work.
- Doing it again next year, and finding that nothing recorded last year's reasoning.
- Reconstructing all of it for a review, which is when a flattened record becomes a real problem rather than an untidy one.
A practice with 400 clients and an average of two or three entities each is looking at a four-figure number of records. The per-check price is not what decides the cost of that.
The question to ask any tool
Almost every AML tool will show you a demo verifying a person. That demo is not the hard case and it will not tell you what you need to know. Ask instead:
“Show me what happens with a company client that has a corporate trustee and two beneficial owners. Not a person — a group.”
Then watch for four things:
- Does it create records for the non-individuals? Many tools can only produce a verified person. A company, a trust and an SMSF either become one record each or they become nothing.
- Does it write into your system, or only its own? If the group only exists inside the vendor's portal, your practice system still shows one client and the structure is somewhere else.
- Do the relationships survive? Five records with no links is not the same as a modelled group, and the difference only shows up under review.
- Can it use custom fields? No practice system has a native home for beneficial-ownership data. If the tool can only write to standard contact fields, compliance information is being stored in a name-and-address shape.
How StackGo handles it
Stated plainly and checkable. If we run the intake, one workflow collects the whole group and creates all of it in your practice system: individuals, companies, trusts and partnerships as separate records, using custom fields as well as standard ones, with the relationships and groups between them modelled in Xero Practice Manager, FYI and Karbon.
The precision matters, so: it is the intake workflow that does this, not a single check. A check verifies one thing. The workflow is what collects a structure and writes a structure.
We can also match as well as create — if the entity already exists in your system, it is found rather than duplicated. Duplicate clients in a system you have used for a decade are their own kind of problem.
We would rather you test this than believe it. Bring your most tangled client to a demo, not your simplest one.
Ready to make onboarding minutes, not hours?
Start free and run your first check today, or book a demo and we will walk you through it.