Have you ever wondered why your accountant asks to see your passport and other proof or electronic verification of your identity? 
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 

The most recent legislation came into effect on 10 January 2020, which widened the scope of the regulations and changed the CDD requirements to report discrepancies we discover about people who control a business (persons of significant control) to Companies House. 
 

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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