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What Are Business Owners’ Anti-Money Laundering Responsibilities?

Although no one expects business owners to become experts at detecting white-collar crime, under money laundering regulations, certain businesses such as law firms, accountants, estate agents, and financial services businesses must comply with certain duties which include putting in place internal anti-money laundering controls and systems. Failure to do so could lead to a regulatory investigation or prosecution by a body such as the Financial Conduct Authority and the Crown Prosecution Service (CPS).

What is anti-money laundering due diligence?

If your business is covered by The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 you are responsible for carrying out customer due diligence. This involves taking steps to ensure that new customers are verified and say who they are.

With every new customer, you are required to obtain evidence of their:

  • Name
  • Home address
  • Date of birth

The evidence must consist of an official document that includes a photograph such as a passport or driving licence alongside a utility bill.

When do I need to undertake anti-money laundering due diligence?

  • When you onboard a new customer or client.
  • If you suspect money laundering or terrorist financing activity.
  • If an existing customer’s circumstances change.
  • If you do not usually deal with large value transactions but on this particular occasion you are involved in a deal worth over €15,000.
  • As a high-value dealer, when you:
    • make a payment to a supplier worth €10,000 or more
    • conduct an ‘occasional transaction’ worth €10,000 or more
  • You have doubts about a particular customer’s previous identification documents.

What is ‘enhanced due diligence?

Sometimes you will need to conduct enhanced due diligence checks, for example, if:

  • The customer cannot be physically in front of you when you check their identification.
  • You enter into a business relationship with a PEP (Politically Exposed Person). This is usually a non-UK resident who is a government minister, member of Parliament, head of state and/or their family members or close associates.
  • The client is from a high-risk third country as identified by the European Union.
  • You are alerted to any other circumstances that mean there is a higher risk of money laundering, for example, the customer is making a significant purchase using cash.

Enhanced due diligence involves obtaining further information to establish the customer’s identity. You will also need to make sure that when they make their first payment the money comes from an account that is in the customer’s name. Furthermore, you must make enquiries about where the funds are coming from and the purpose of the transaction.

Wrapping up

The above is merely a small snapshot of the type of due diligence a business covered by anti-money laundering regulations must undertake. To ensure you are fully compliant or to ask any questions, please contact our expert business law solicitors.If you have any questions regarding anything covered in this article, please call us on 02476 231000 or email enquiries@askewslegal.co.