Why does my accountant need to see my passport?
Posted on 29th July 2020 at 16:15
TSince 2017 the UK has had legislation in place to meet the standards and recommendations of the Financial Action Task Force. This is known as the anti money laundering (AML) regime. It’s intended to prevent criminals and terrorists from moving and accessing illegal funds. This is becoming increasingly important as electronic transactions are used more widely.
Client due diligence (CDD)
Your accountant must have an AML supervisor to make sure that everything is done properly. This means there must be policies and processes in place, training for the team and each client’s identity and business activities must be checked.
We’re not just being nosey; we must understand the reasons behind the services and products you provide and check whether there is any risk of money laundering. If your business changes, we might have to complete the CDD process again.
The latest regulations
What is money laundering?
According to the legislation someone will be guilty of money laundering if they:
conceal, disguise, convert or transfer criminal property or remove it from the country
get involved in acquiring, keeping, using or controlling criminal property for someone else
have, use or possess criminal property that they haven’t paid for.
There are also money laundering offences for regulated businesses like accountants, if they don’t report any suspicion of money laundering.
HM Treasury has provided guidance to help accountants prevent, recognise and report money laundering. It has also published a national risk assessment (NRA) of money laundering in the UK. The next national risk assessment is due to be issued this month.
Risks of money laundering
The Institute of Financial Accountants (IFA) has produced a list of circumstances that could represent a high risk of money laundering. These include:
client secrecy, for example, being unwilling to provide information
complex business ownership arrangements
cash-based businesses with unclear sources of funds
one-off transactions with new clients
businesses that trade for a short time, close and then re-start as a new company
taking on work which is outside a business’s normal range of goods and services
multiple unnecessary UK or foreign bank accounts.
The process of confirming your identity is quick and easy, so there’s no need to be concerned. If you would like to know more, please get in touch.
Tagged as: accounting
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