What is money laundering?
Money laundering is the process criminals use to conceal their illegal money and clean it into legitimate money. It is passed through a series of complex transfers and transactions through businesses, where they are able to ‘clean’ their money and make it appear as legitimate business profit.
What is the anti-money laundering compliance?
The anti-money laundering compliance (AML) is a process that prevents people from making money illegally. It’s intention is to stop people from committing money laundering offences. There are 3 main type of offences people commit;
• Acquisition (without adequate consideration), use or possession of criminal property.
• Concealing, disguising, converting, removing or transferring criminal property from authority.
• 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.
These offences are in correspondence with those set by the proceeds of crime act 2002. To comply to the AML, you must respect law and rules as well as making sure the correct data requirements are up to date.
For more information on the proceeds of crime act visit Gov.uk.
Why is AML important?
The AML helps to identify laundering that is related to counter-financing of terrorism (CFT), this is used to combat terrorism that is financed by money laundering. It also helps to prevent prosperity to death from drug and human trafficking, weapons and other crime acts. ML has a major effect on hundreds of thousands of financial institution’s in the UK, an estimated £90bn is being laundered through the UK each year. If you are caught using laundered money, you can face big fines and may be convicted with criminal charges, hence why many organisations are concerned about money laundering and take it very seriously if anyone is caught.
Why does AML matter to payroll providers?
In accordance to the Money laundering regulations 2017 act (MLR), accountancy providers are classed as ‘relevant persons’ and must follow the relevant anti-money laundering regulations. As payroll providers, it is possible many business/organisations that want payroll services from us could be laundering money. Therefore, we are required to take a risk assessment of our exposure to money laundering through our clients. If we fail to do so, this could lead to facing a criminal charge and/or sentence.
How do we show we are AML Compliant?
It is our duty to verify our clients and keep all of our AML activities on records for future reference. Should an issue arise, we will be required to prove we had no knowledge nor suspected said client were money laundering. Failure to do so could also result in being sentenced.
In order to be fully AML compliant, our clients must also do everything they can to help. Therefore, we ask clients to provide some forms of documentation before we begin conduct business with them. Some of the documents we ask them to provide are; Identification, all partners in the partnership, details of the shares in the company, all shareholders with 25% or more shares in the company etc… The documents may vary for non-UK citizens.
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