I have an EDD report from one of the Four Big Firms. Does That Mean the Client Is Clean?

In the world of financial compliance and risk management, Enhanced Due Diligence (EDD) reports—often conducted by prestigious firms such as Deloitte, PwC, EY, or KPMG (commonly referred to as the "Big Four") are considered the gold standard.

These reports delve deeply into a client's background, source of funds (SOF), and source of wealth (SOW), aiming to identify any red flags related to money laundering, corruption, or other illicit activities.

However, a positive EDD report at one point in time does not equate to a perpetual "clean bill of health." New information, geopolitical shifts, or evolving regulatory standards can dramatically alter a client's risk profile.

This is vividly illustrated in the case of Roman Abramovich and Jersey, as detailed in a recent article about his legal battle with the Jersey Government over seized assets.

• Why Roman Abramovich is suing the Government of Jersey over £5 billion of seized assets
• https://www.itv.com/news/channel/2025-11-20/why-is-abramovich-suing-jerseys-government-over-5-billion-of-assets

The Abramovich Case: A Cautionary Tale

• Roman Abramovich, the Russian oligarch and former owner of Chelsea FC, obtained residency in Jersey in 2017 after undergoing what his lawyers describe as "extremely stringent, detailed KYC [Know Your Customer] tests run by one of the four big firms."
• This process involved a comprehensive ratification of his funds' origins, which was standard for high-net-worth individuals seeking residency.
• For approximately five years, Abramovich enjoyed this status without apparent issues. However, everything changed following Russia's invasion of Ukraine in February 2022.
• In March 2022, Abramovich was sanctioned by the UK Government, leading to the forced sale of Chelsea FC.
• Separately, the Jersey Government froze assets worth around $7 billion (approximately £5.3 billion) held on the island, alleging they were proceeds of crime.
• Abramovich's legal team argues that since the source of his wealth "has never changed," the funds deemed acceptable in 2017 should not suddenly be considered tainted in 2022.
• They emphasise the rigour of the original KYC checks as evidence of legitimacy.
• Yet, this defence overlooks critical realities of due diligence.
• The geopolitical landscape shifted dramatically with the invasion, prompting intensified scrutiny of Russian-linked assets worldwide.
• What was "fine" in 2017 under pre-invasion standards became problematic amid new sanctions and allegations of criminal origins.
• Moreover,
• The case has revealed procedural flaws: Jersey police admitted to unlawful searches of premises linked to Abramovich and agreed to pay damages and apologise.
• Additionally, in ongoing litigation, Abramovich has accused the Jersey Government of conspiracy, citing delays in releasing case information and the admission that a large amount of data had been deleted.
• These developments underscore how initial due diligence can be undermined by subsequent events or incomplete information.

Why EDD Reports Aren't a One-Time Guarantee

The flaw in relying solely on a historical EDD report lies in several key factors:

1. Temporal Limitations: EDD assessments are snapshots in time. They evaluate available data at the moment of review but cannot predict future revelations. In Abramovich's case, the 2017 report predated the Ukraine invasion and the resulting global sanctions regime, which reframed many Russian business dealings as high-risk or illicit.
2. Potential for Incompleteness or Inaccuracy: Even Big Four firms rely on the information provided by clients and third-party sources. If data is withheld, misrepresented, or later proven false, the report's conclusions can be invalidated. The article notes the complexity of Abramovich's fund ratification, but ongoing court revelations—such as deleted government data—suggest that not all the facts were fully vetted or preserved.
3. Evolving Risk Landscapes: Market acceptance, regulatory changes, and societal norms evolve. What passes muster in one era may fail in another due to heightened awareness of issues like corruption or geopolitical ties. For instance, pre-2022 tolerance for certain Russian investments has given way to strict enforcement, as seen in the freezing of Abramovich's assets despite no change in their nominal source.
4. Superseding Information: New evidence can emerge post-report, such as investigative journalism, whistleblower accounts, or official inquiries. In this case, the Jersey Government's 2022 allegations of proceeds of crime were based on post-invasion assessments, overriding the 2017 clearance.

Recommendations for Businesses and Compliance Teams

To mitigate these pitfalls, organisations should not treat EDD reports as endpoints but as starting points for ongoing vigilance:

• Implement Continuous Monitoring: Regularly screen clients against updated sanctions lists, adverse media, and PEP (Politically Exposed Persons) databases. Automated tools can flag changes in real time, prompting reassessments.
• Conduct Periodic Reviews: Schedule EDD refreshes, especially for high-risk clients, at intervals like every 1-3 years or upon trigger events (e.g., geopolitical shifts, ownership changes).
• Diversify Due Diligence Sources: Don't rely solely on one firm's report. Cross-reference with independent investigations, open-source intelligence, and regulatory filings to build a more robust picture.
• Document and Audit Processes: Maintain detailed records of all due diligence steps to defend decisions in court or audits, avoiding issues like the deleted data in the Abramovich case.

In conclusion,

• An EDD report from a Big Four firm provides valuable assurance but is not infallible or eternal.
• The Abramovich saga demonstrates how static assessments can be upended by dynamic realities, emphasising the need for proactive, adaptive risk management.
• Businesses that fail to monitor and recheck facts risk reputational damage, legal entanglements, and financial losses when risks materialise.
• As the article notes, these matters are "extremely nuanced" and far from "black and white," but one thing is clear: complacency in compliance is a liability no firm can afford.

THE ARTICLE

https://www.itv.com/news/channel/2025-11-20/why-is-abramovich-suing-jerseys-government-over-5-billion-of-assets

Why Roman Abramovich is suing the Government of Jersey over £5 billion of seized assets

When Russia invaded Ukraine in 2022, oligarch and former Chelsea FC owner Roman Abramovich had assets worth $7 billion or £5.3 billion seized in Jersey as the island's Government ruled they were proceeds of crime.

A long-running legal battle followed, mainly in the shadows due to privacy orders, some of which have now been lifted, allowing for more reporting of the case, although it is still active.

In November 2022, Reuters revealed that police in Jersey had admitted to carrying out unlawful searches of premises allegedly linked to the sanctioned Russian billionaire and had agreed to pay damages and apologise.

Journalist Nick Purewal has been following the complex legal case and spoke to ITV Channel about what we know now:

$7 billion has been held in Jersey for the past three-and-a-half years. What's the relevance now?

"All of these cases that have been running since 2022 in Jersey were subject to privacy orders, and some of those have been lifted.

"This all started in 2017 when Roman Abramovich took up residency in Jersey. The Jersey Government had been trying to convince him to do that for a very long time, and eventually he agreed.

"In the 12 months leading up to him being granted residency, the Government ran through a comprehensive process ratifying the source of his funds, which will be crucial now and is relatively standard, but obviously very complicated.

"He had residency for around five years, then everything changed in so many ways, for so many people, with Russia's illegal invasion of Ukraine in February 2022.

The UK Government sanctioned Roman Abramovich in March 2022, which led to the sale of Chelsea. Separately, his funds in Jersey were frozen by the Jersey Government, alleging at the time and since that those assets originated from the proceeds of crime.

"That has led to a case that's been running through the courts with hearings on and off for three-and-a-half years. It's the lifting of the privacy orders that allows some of this to be reported and discussed."

Nick Purewal is a former Chelsea Correspondent for the Press Association and has written a book about Abramovich's sale of the football club. Credit: ITV Channel

What is Abramovich's argument to get this money back?

"The point he would make is that to be granted residency in 2017, he had to pass extremely stringent and detailed tests, industry-standard KYC [Know Your Customer] tests that were run by one of the four big firms.

"The source of the money, the wealth, has never changed, so I think the difficulty from his position was fine in 2017, but suddenly wasn't fine in the middle of 2022.

"What he wants to do is free up money from the sale of Chelsea FC, £2.35 billion, so that it can be donated to an independent humanitarian foundation that would benefit all victims of the Ukraine war, and that was always the agreement in the terms of allowing the Chelsea sale to happen.

"Roman Abramovich has repeatedly been clear that this isn't money he wants back; he wants this huge amount of money to go to its best use to benefit victims of the war."

What are the chances of this money actually going to that?

"All you can do at this point is take him at his word, and he's been working very hard to try to do that, but obviously, the money is frozen, and for it to be released, the UK Government would have to issue a licence for that to happen.

"You can understand why, at the moment, while Jersey is alleging that the source of these funds is criminal, which he would strongly refute, there's a log jam.

"Also, Roman Abramovich has brought this case of conspiracy against the Jersey Government, which is now in the public domain.

"His lawyers had requested the standard release of all the information and data to do with the case, and for more than a year, there was no release.

"Eventually, when the judge said, 'Why not?', the Government admitted in one of these hearings that a large amount of that information had been deleted.

"That's why the judge, in frustration, ordered what there was to be released and allowed this case of conspiracy to progress.

"It's an extreme allegation, clearly one that the Jersey Government has strongly denied, and the case is ongoing.

"As with all these things, none of this is black and white; it's highly nuanced.

"Some of these obstacles are quite large, so I think there's still a long way to go, but I think it's clear that no one is giving up."

https://www.itv.com/news/channel/2025-11-20/why-is-abramovich-suing-jerseys-government-over-5-billion-of-assets