If you run a business that offers services including bookkeeping, or any service whereby you are responsible for collating financial data you must be covered for AML. This includes carrying out due diligence on your customers.
You must have internal controls and monitoring systems. These controls will depend on the size and complexity of your business, including the number of customers you have and the number and type of products and services you provide. I have come across several virtual assistants and bookkeepers through networking who are not aware or do not have a Money Laundering supervisor so are not compliant with AML.
To be compliant you need to consider the following.
When meeting a new client, you will begin to establish a business relationship. This is one that you enter into with a customer where both of you expect that the relationship will be ongoing. It can be a formal or an informal arrangement.
Firstly, you need to obtain information on:
- the purpose of the relationship
- the intended nature of the relationship – for example where funds will come from, the purpose of transactions, and so on
The type of information that you need to obtain may include:
- details of your customer’s business or employment
- the source and origin of funds that your customer will be using in the relationship
- copies of recent and current financial statements
- details of the relationships between signatories and any underlying beneficial owners
- the expected level and type of activity that will take place in your relationship
How to carry out due diligence:
At the beginning of this business relationship, you are required to use the information to carry out due diligence. This means taking steps to identify your customers and checking they are who they say they are. In practice this means obtaining a customer’s:
- photograph on an official document which confirms their identity
- residential address and date of birth
The best way to do this is to ask for a photographic ID like a passport/ driving licence, along with utility bills, bank statements and other official documents. Other sources of customer information include the electoral register and information held by credit reference agencies such as Experian and Equifax. Personally, I use credit safe.
If you have doubts about a customer’s identity, you MUST NOT continue to deal with them until you’re sure.
When to apply due diligence measures:
- when you establish a business relationship with a customer (or another party in a property sale)
- when you suspect money laundering or terrorist financing
- when you have doubts about a customer’s identification information that you obtained previously
- when it’s necessary for existing customers – for example if their circumstances change
- if you aren’t a high-value dealer when you carry out an ‘occasional transaction’ worth €15,000 or more
- as a high-value dealer, when you:
- make a payment to a supplier worth €10,000 or more
- carry out an ‘occasional transaction’ worth €10,000 or more
When to carry out enhanced due diligence:
In some situations, you must carry out ‘enhanced due diligence’. These situations are:
- when the customer isn’t physically present when you carry out identification checks
- when you enter into a business relationship with a ‘politically exposed person’ – typically, a non- UK or domestic member of parliament, head of state or government, or government minister and their family members and known close associates
- when you enter into a transaction with a person from a high risk country identified by the EU
- any other situation where there’s a higher risk of money laundering
The enhanced due diligence measures for customers who aren’t physically present and other higher risk situations include:
- obtaining further information to establish the customer’s identity
- applying extra measures to check documents supplied by a credit or financial institution
- making sure that the first payment is made from an account that was opened with a credit institution in the customer’s name
- finding out where funds have come from and what the purpose of the transaction is
The enhanced due diligence measures when you deal with a politically exposed person are:
- making sure that only senior management gives approval for a new business relationship
- taking adequate measures to establish where the person’s wealth and the funds involved in the business relationship come from
- carrying out stricter ongoing monitoring of the business relationship
The following links below will help you decide how you can become compliant with MLR regulations.
Directly with HMRC :
If you have your License to practice with an awarding body they may be able to provide you with MLR Supervisory. See the below links: