Anti-Money Laundering

If you are in the business of providing services to other businesses then you’ll need to familiarise yourself with the anti-money laundering regulations.

These are a specific set of rules and procedures implemented to help prevent money from criminal activities being used for legitimate activities.

Whilst money-laundering is commonly associated with highly professional criminals and gangsters, it can also take the form of smaller frauds and crimes committed by otherwise law-abiding citizens.

Since business to business transactions are generally much larger by their nature, it is not unknown for criminals of all sizes to use a company to help hide and spend their illegal gains. Therefore the anti-money laundering regulations 2007 were introduced to help combat this.

If you are selling products or services to businesses, the anti-money laundering controls may effect your business.

Who Do The Anti-Money Laundering Regulations Affect?

The HMRC supervises the four following business sectors:

  • Money Service Businesses
  • High Value Dealers
  • Trust or Company Service Providers
  • Accountancy Service Providers

If you fall in to any of these sectors then you will almost certainly need to register for the money laundering regulations. In addition you’ll need implement the correct procedures to deal with it and ensure your company does not (intentionally or otherwise) aid with the movement of money gained by illegal means.

How to Comply with The Anti-Money Laundering Law

If your business activities fall under the scope of the anti-money laundering regulations then you will need to take the appropriate steps to protect yourself legally:

Register with HMRC

hmrc anti-money laundering regulations 2007The first step is to register for anti-money laundering with HMRC. By doing this you will be acknowledging your legal responsibilities and committing to comply with the rules.

Registration is NOT optional – you are required by law to register if you fall under the business sectors mentioned.

Unfortunately registering for anti-money laundering regulations is not free, nor is it particularly cheap with registrations often costing several hundred pounds. As well as registering each business premises that will be used to provide the services, you may also need to register several persons in the business via the ‘fit and proper’ test which adds further costs.

Implement Due Diligence Procedures

As part of registering for anti-money laundering, you’ll also need to ensure your business implements procedures to comply with the regulations. At the basic level this means running a compliance check on each qualifying customer.

In essence this check makes sure the customer is who they say they are and is not classed as being a high risk for money laundering activities. You can usually run each check for between £2-£5 per person and there are a number of ‘AML Check’ companies who provide this service – click here to do a Google search for such businesses.

Because the anti-money laundering regulations are so important and can be complex depending on your situation, this article is only designed to be a very basic introduction to the area. It should not be used as a substitute for legal advice and you are strongly urged to read up on the anti-money laundering regulations on the HMRC website in order to fully understand the requirements and effect on your business.