HATTERS DISTILLERY LIMITED – CUSTOMER DUE DILIGENCE POLICY
As part of the Alcohol Wholesaler Registration Scheme (AWRS), Hatters Distillery Ltd is mandated to perform due diligence checks on both customers and suppliers involved in the alcoholic drinks supply chain.
The significance of due diligence cannot be overstated in safeguarding our business against commercial risk, preventing exposure to fraudulent transactions, and mitigating the potential for substantial financial losses.
By making due diligence a compulsory practice for all enterprises operating in the alcohol industry, it will serve to deter fraudulent activities, instill greater confidence among consumers, level the playing field for legitimate businesses, and uphold our reputation and standing.
We diligently conduct comprehensive due diligence examinations, adhering to HMRC guidelines and employing the ‘FITTED’ framework to identify potential risks within supply chains. We are committed to ‘knowing our customers and suppliers.’
Customers or suppliers identified as high-risk entities will undergo in-depth scrutiny before we consider engaging in any trade. High-risk customer and supplier assessments will be reviewed every 6 months, while all others will be assessed annually, with periodic evaluations to detect any shifts in activity, enabling us to take appropriate actions.
All customers and suppliers must furnish the necessary documents and complete the required questionnaire to enable Hatters Distillery Ltd to conduct a thorough risk assessment before establishing any business relationship. We will exclusively engage in trade with customers or suppliers who successfully pass our assessment checks.
Any customers or suppliers who fail to meet our internal criteria will be duly informed that we cannot establish an account or engage in trade. Suspected fraudulent activities will be promptly reported to HMRC.
The information provided will be subject to a case-by-case review, with final approval granted by the company director.
All initial checks and subsequent reviews will be meticulously documented in electronic customer or supplier files. Reminders for due diligence checks will be recorded in our CRM software and Google Calendar to ensure compliance.
We will carry out day-to-day checks to identify potential transactions that may be associated with fraud or involve goods on which duty evasion is suspected. These checks will be applied to both supplier purchase orders and customer sales orders.
When evaluating whether to conduct further checks detailed below – businesses first have to pass a ‘common sense’ check which consists of a scoring system.
- Any businesses scoring 5 or 6 are deemed to be sound, trustworthy business with no reason to suspect any fraud – and standard request for business information (AWRS, VAT, Company Number, Address) should be requested, cross checked and logged.
- Any businesses with a score of 7, 8 or 9 or higher should be put through the checks detailed below.
- Any businesses with a score of 10, 11 or 12 should involve site visits, further inquiries and may be best avoided.
- Any businesses with a score of 13, 14 or 15 should be avoided and also reported to HMRC for the reasons uncovered whilst embarking on the due diligence evaluation.
| Length of trading relationship | Length of establishment of trading partner | Corporate stability | Consistency of order | Financial record | |
| High (3 Points) | New and untested | New to the market; limited history; unknown key personnel | Erratic/frequent changes of personnel, business model, ownership or address | Highly volatile | Frequent credit control or solvency worries |
| Medium (2 Points) | Relatively recent | Relatively recent | Mixed picture, with varying levels of communication of change | Mixed picture, with some variations needing better explanation | Some ups and downs; resolved by discussion |
| Low (1 Point) | Long and well established | Long and well established Reputable UK business | Stable & predictable – changes wellflagged and explained | Regular and consistent, with fluctuations in volume and products easily explained | Highly reliable, prompt and consistent |
For a retail (off-sales/license) customer to open an account:
In order for a business to register for trade in alcohol, Hatters Distillery Limited will require the following documents:
- Copy of Incorporation Certificate
- Copy of VAT Certificate
- Company Bank Details
- Owner Photo ID Details such as Passport & Driving License
- Copy of Business Utility Bill (Less than 3 months old)
- Copy of Lease agreement or proof of Freehold of the business premises
Once Hatters Distillery Limited has collated this information, the necessary checks will be conducted before opening the account. Payment methods are Bank Transfer or Credit Card only. Hatters Distillery Limited does not accept cash payments. Bank Transfer payments can only be accepted under the Money Laundering Regulations. Note that photo ID may be requested for card payment at the time of payment. There is also a charge of 2% on any credit card payments. Third party card and cheque payments will not be accepted. Any customers identified as high risk will undergo further questioning. High risk customers that are accepted will be evaluated every three months; all other customers will be reviewed on an annual basis.
For a wholesaler to open an account:
In order for a business to register as a wholesaler, Hatters Distillery Limited will require the following documents:
- Copy of Incorporation Certificate
- Copy of VAT Certificate
- Company Bank Details
- Owner Photo ID Details such as Passport & Driving License
- Copy of Business Utility Bill (Less than 3 months old)
- Copy of Lease agreement or proof of Freehold of the business premises
- Signed account forms
- Picture of business address, if applicable
Once the information has been gathered, we will complete a risk assessment. Any customers identified as high risk will undergo further questioning. High risk customers that are accepted will be evaluated every three months; all other customers will be reviewed on an annual basis. Any suspicious retail pricing at uneconomic levels or improper trading patterns will be reported to HMRC in a timely manner.
SUPPLIER DUE DILIGENCE POLICY
As a part of the Alcohol Wholesaler Registration Scheme (AWRS), Hatters Distillery Limited is required to conduct due diligence checks on partners involved in the supply chain for alcoholic drinks. Hatters Distillery Limited will require the following documents for a wholesaler to open an account to start trading:
- Copy of Incorporation Certificate
- Copy of VAT Certificate
- Copy of company’s last filed set of accounts
- Copy of Money Laundering Certificate, if applicable
- Owner/Director’s/ Proprietor’s photo ID
- Company Bank Details
- AWRS number
- Copy of Business Utility Bill (Less than 3 months old)
- Headed paper complete with Director’s Signature
- Proof of Due Diligence the company carries out
- Copy of company’s term
- If you are a UK duty paid supplier, please provide us with copies of form W-5 (or similar document) showing evidence of duty payment
Once the supplier has sent the above information, we will review it. The overall risk of the supplier will be established. If the business is identified as a high-risk supplier, further questions will be asked, and site visits will be conducted as appropriate. Any suspicious retail pricing at uneconomic levels or improper trading patterns will be reported to HMRC in a timely manner. All high-risk suppliers will be reviewed every three months; all other suppliers will be reviewed on an annual basis.
We will check if an alcohol wholesaler is approved by verifying their AWRS license number on the government portal: