Due to the role it plays in funding organized crime, terrorism and other nefarious activities, money laundering is understandably a key priority for financial watchdogs all over the world. In the UK, we are fortunate to have world-leading rules and regulations in place, which provide guidance (and demand compliance) from businesses in their anti-money laundering (AML) practices.
Indeed, the Financial Conduct Authority (FCA) and His Majesty’s Revenue and Customs (HMRC) both have divisions which are specifically devoted towards ensuring companies in the UK meet their AML obligations. These apply to all businesses operating in the financial services sector, as well as those in real estate, art commerce and a range of other industries. To ascertain whether AML legislation applies to your company, check HMRC’s advice page on the subject.
Carrying out KYC
The first step to achieving AML compliance is undertaking thorough Know Your Customer (KYC) protocols, both for new customers and existing ones when their details change. This merely involves obtaining basic identity information about them (such as their name, address and telephone number) and verifying it to make sure they are who they say they are. Enlisting the help of approved KYC AML providers can make this step much simpler.
Taking extra care with PEPs
Another acronym you need to be aware of is politically-exposed persons (PEPs). This refers to any politician, head of state or any of their known associates – both domestic and foreign – or indeed any individual who poses a higher risk of money laundering. In such scenarios, you must carry out additional checks and tests to verify the PEP’s identity and determine the source of their wealth.
Reporting suspicious activity
If you do come into contact with an individual who you suspect may be involved in illegal financial activity, it’s not enough to simply cut business ties with them. Instead, you must document all of your dealings with them up until this point, taking extra care to highlight the red flags which made you suspicious of them. Then you’ll need to deliver this information to the relevant financial authority (FCA or HMRC).
Appointing an AML officer
It’s advisable for every organization to appoint a member of staff who is tasked with ensuring that all AML protocols are being followed and that every precaution is taken to prevent illicit activity on the company’s books. This person must be responsible for your track record and for conducting regular audits on your own business dealings to ensure they are up to scratch. They must also wield the authority to make others follow their instructions when necessary.
Training staff
As well as having a single individual in charge of your AML policy, you’ll also need to provide the relevant education and training for any employee who will be involved in onboarding new clients, handling transactions or any other activities which could involve money laundering. Staff must be able to spot the signs of potential wrongdoing so that any crimes can be reported and mitigated as soon as possible.
In order to combat money laundering and protect your organization from penalties and reputational damage, you must ensure you implement best practices aimed at curbing financial crimes.
Founder Dinis Guarda
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