How to prevent financial abuse

Under APES 305 and APES 110, the “client” is the individual or entity with whom the engagement is established. It is essential to identify who the client is at the outset – as confidentiality, authority to act, and communication rights apply only to the client unless there is specific legal authority to disclose.

Determine who the client is, who is authorised to give instructions, especially for an entity or POA, and who will receive information. Consider:

• Is the person engaging you the actual client or someone acting on their behalf?
• Are there any “dummy director” or “nominee” arrangements?
• Who benefits from the transaction or structure, and who bears the liabilities?
• Are there conflicts of interest (actual or perceived) between parties involved?

Identify interests and relationships between parties engaged that might create an actual or potential conflict of interest, both before determining whether to accept an engagement and throughout the engagement.

The Tax Practitioners Board’s Guidance Statement TPB(GS) 42/2022 processes on proof-of-identity requirements outlines mandatory steps for verifying client identity and detecting impersonation, coercion, or unauthorised third-party involvement. These checks should be applied consistently and strengthened where there are concerns about vulnerability or financial abuse.

Under AML/CTF (AML/CFT in New Zealand), many accountants in practice are subject to Customer Due Diligence (CDD) obligations, including verifying identity, beneficial ownership, and monitoring for suspicious activity.

These processes may further support early detection of financial-abuse risks.

Practices should include identity, authority and communication‑control steps in their onboarding templates to ensure clarity on who the client is, who may provide instructions, and how information will be shared. Where a person other than the client is seeking to control communications or instructions, treat this as a risk indicator and apply heightened verification and documentation. If the vulnerable person is not your client, please consider your confidentiality obligations under APES 110 and the Code of Professional Conduct (for tax practitioners). You may be limited in what you can do or disclose, particularly where the financial abuse, although abhorrent, is not actually illegal.

Organisational policies on financial abuse raise awareness, set clear protocols to be followed, and protect staff. Create clear organisational policies covering client verification, authorisation, communication protocols, staff training on signs of abuse, documentation standards, escalation procedures, and lists of support resources. Test with practice scenarios to find weaknesses. If you have a home office, develop engagement protocols that recognise your personal vulnerability.

Suggested wording to adapt for your practice: “Our practice takes steps to identify and respond to indicators of financial abuse. We will verify identity and authority, confirm instructions with the client where appropriate, and may request to speak privately with clients as part of our standard process. We keep objective records of material instructions and decisions. We do not disclose client information without proper authority except where legally required. Where we have concerns, we may seek guidance, recommend independent advice, or decline/cease an engagement, consistent with our professional and legal obligations.”

Develop scripts to ensure questions are asked in a safe way, such as a script for requesting private time with a person:

“As part of our standard practice, I’d like to spend a few minutes with [name] privately to confirm their understanding of these documents and the instructions”.

If private time is not possible, consider scheduling a “routine compliance check-in” by phone or video with the client, using contact details you have verified belong to them.

Where a POA is in place, check the POA terms and confirm instructions are in scope and acting in the client’s best interests. Recent or unusual POA arrangements warrant extra scrutiny. In higher risk situations, recommend independent legal advice and capacity assessments where appropriate, noting this may be impracticable in some situations and should be balanced against the client’s circumstances.

Plan for “what if” for all parties, where a transaction or structure increases one person’s liabilities or reduces autonomy. Well-intentioned arrangements, like appointing a spouse as co-director or creating family trusts, can become tools for abuse when relationships break down or financial stress hits. In planning and structuring work, discuss worst-case scenarios, alternatives, and exit strategies (e.g. for relationship breakdown, business failure, or loss of capacity).

If you suspect abuse, unethical or illegal conduct, you can decline or withdraw from the engagement. This can be difficult and may create non-billable costs. “After careful consideration, I’m unable to continue this engagement.” Don’t make accusations or over-explain. Document your reasoning internally and consider legal advice where necessary, especially where contractual obligations exist. If comfortable and you feel it is necessary, you can explain potential illegality to clients or actions that would be outside your professional and ethical obligations, provided you are not legally prohibited from doing so.

Share resources from CPA Australia or safeguarding organisations to help clients understand abuse risks and protection options. Keep a list of referral pathways for support services. Help clients understand their own assets, liabilities, and legal officeholder responsibilities, including what belongs to them alone, and any instructions from Family Law Court orders involving their accounts or entities. Supporting informed understanding reduces vulnerability and helps clients engage safely in financial decisions.