Anti-Money Laundering Compliance
Money laundering is big business and something that’s constantly hitting the headlines. However, when we read about it in the newspaper, we tend to think of it as something that doesn’t affect us.
Until we open a bank account…then we feel the pressure of anti-money laundering compliance and legislation. Despite that, many of our clients are surprised when we at Payplus ask for confirmation of identity.
Why do we do this? The short answer is; we are obliged to. Is it something we do willingly? Kind of.
While we accept it as part of our obligations, we would much rather be doing what we do best – payroll. Does it affect you as a client or a potential client? Yes. Unfortunately, it does.
In order to meet our obligations, we need to confirm your identity. For us, confirming our clients’ identity is only the tip of the iceberg. Behind the scenes, we have to keep a whole anti-money laundering compliance process up to date.
What this means for you is that when you become a client of Payplus, we will ask you to confirm your identity. Would you rather be doing something else? Of course, you would. But our hope is that this article will help you understand why we do it and encourage your cooperation.
What is anti-money laundering compliance?
Anti-money laundering (AML) is a process that is in place to stop people from making money illegally. Its intention is to help prevent money laundering offences, terrorist financing, securities fraud and market manipulation.
The three key money laundering offences, as set out in the Proceeds of Crime Act are:
- Concealing, disguising, converting, transferring or removing criminal property from the jurisdiction.
- Entering into or becoming concerned in an arrangement, knowing or suspecting that it facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person.
- Acquisition (without adequate consideration), use or possession of criminal property.
Being AML compliant involves respecting laws, rules and regulations, as well as having procedures in place that satisfy the most up to date requirements to counteract money laundering. Affected firms need to be able to demonstrate that they have made the necessary checks prior to receiving payment from a third party.
Why is anti-money laundering compliance important to us as citizens?
There are various figures in circulation, but it is heavily reported that money laundering costs us dearly in the UK. A respected broadsheet newspaper quoted an estimated figure of over £90bn being laundered through the UK each year. The consequences of this range from personal security and prosperity risks through to loss of life to activities such as drug and human trafficking, weapons crime and terrorism. The National Risk Assessment (NRA) has identified the main risk area being the creation and operation of companies and financial transactions through client accounts.
Why is it important to Payplus as a payroll services provider?
The Money Laundering Regulations 2017 stipulate that all accountancy service providers fall under the term ‘relevant person’ and are therefore subject to AML regulation. As payroll service providers we are required to undertake a risk assessment of our exposure to money laundering via the clients we deal with. Failure to do so could result in a prison sentence. That is why we adhere to strict money laundering verification processes and procedures.
It is everyone’s duty to do what they can to help avoid money laundering, but as a payroll provider, we have very specific requirements to respect. It is our duty to do all we can to verify the identity of a client as well as keep records of all our AML activities. Should money laundering issues arise within our firm, we are required to demonstrate without a doubt that we had no knowledge or suspicion of them. Failing to do so could end up with criminal consequences. It is for these reasons that we have very strict AML procedures in place.
What do we have to do to show we are compliant?
There are minimum steps that demonstrate that a firm is compliant. At Payplus, we have all of these steps in place (and more). The steps include:
- Having a member of senior management who takes responsibility for AML compliance.
- Developing internal procedures that are documented and designed to prevent money laundering.
- Demonstrating that we review our procedures annually.
- Making everyone in our business aware of the procedures.
- Having a procedure in place to identify clients and their business activities.
- Keeping our records secure and up to date.
- Having a clear procedure in place for reporting suspicious activity.
- Training all our staff on AML procedures and keep a record of that training.
What do we require from our clients?
In order to be compliant, we rely on the cooperation of our clients. This is why we ask our clients to identify themselves prior to engaging in professional activity for them. This identification process involves recording the Full Name, Date of Birth, Nationality and Home Address for:
- All shareholders with 25% or more of shares in the company.
- If there are corporate shareholders with 25% or more shares, then we need details of individual shareholders with 25% or more of shares in that company.
- All partners in a partnership.
- All board members in a charity.
- The Head Teacher for a school or academy.
For non-UK Citizens, we also need a certified copy of their photo ID and a certified copy of proof of address.
While we appreciate that providing this information is often perceived as a nuisance by certain clients, we hope that by sharing the reasons why we do so will help you understand why we simply can’t ignore our obligations.
What to do if you have questions
If we’ve asked you for information to help us satisfy our AML requirements, we hope you’ll now have a better understanding of why we need to do so. If you have questions that we haven’t answered here, all you need to do is get in touch and we will give you the answers you need. We count on your cooperation on this and hope we can make the whole process as pain and stress-free as possible.