If your business needs to carry out money laundering checks, there are several responsibilities you need to meet. These responsibilities include carrying out customer due diligence, risk assessments, and record keeping. However, knowing which responsibilities your business needs to adhere to can take time to learn as they vary from business to business.
To help you understand the responsibilities your business has under the regulations, this post highlights some of the responsibilities businesses have under the Anti-Money Laundering Regulations.
Customer due diligence requirements
Customer due diligence means checking your customers are who they say they are. Your business will need to obtain the following as part of the customer due diligence checks:
- The customer’s name
- The customer’s photograph on an official identity document
- Their residential address
- Their date of birth
Typically, documents can include but are not limited to a passport, utility bill, bank statement and driving licence. It is also possible to use the electoral register and credit reference agencies to confirm the information you are given.
If the customer you are dealing with is acting on behalf of another person, you need to identify the beneficial owner. For example, if your customer is a limited company, the beneficial owner is any person of significant control within the company.
When carrying out customer due diligence checks, if you have doubts about the customer’s identity, or who the beneficial owner is, you must stop dealing with them until you are satisfied.
Keeping your records up-to-date
After carrying out the customer due diligence checks, you must ensure the information about the customer is kept up-to-date. If your customer’s details have changed, you will need to:
- Amend your risk assessment if their circumstances change
- Carry out further due diligence if needed
Risk Assessment
Before implementing internal controls, your business must first understand the risks it’s facing. To start, consider the following:
- Who your clients are
- The types of products and services they offer
- The jurisdictions they operate in
- Their delivery channels
- Their transactions
For example, it’s easier for fraudulent activity to occur if the business operates remotely; it’s easier to pass off fake documents during onboarding. However, if a business is carrying out face-to-face checks, it’s easier to verify that the documents are genuine and that photos accurately represent the person.
Once you’ve identified the risks, you need to:
- Build appropriate systems and controls to mitigate the risks
- Determine customer due diligence measures on a risk-sensitive basis
- Take into account situations and products which can present a higher risk of money laundering
Internal controls and ongoing monitoring of your business
Your business needs to have internal controls in place to protect itself from potential threats. The controls need to include a method of identifying a potential threat and the steps that need to be taken to prevent the threat from happening. Typically, the controls should include the following:
- Appointing a nominated officer and making sure employees know to report suspicious activity to them
- Designating a compliance officer if the business is large or complex
- Provide senior managers with regular information on money laundering risks
- Training employees on their money laundering responsibilities
- Document and update money laundering procedures
- Make sure money laundering is taken into account in the day-to-day running of the business
Summing up
Anti-money laundering responsibilities can be complex and vary depending on the business. However, there are standard practices and procedures that can be adopted and implemented in any business that has to abide by the regulations. Some businesses may need to implement more comprehensive checks than those outlined above. So, it’s always best to check with governing bodies and organisations to ensure your business completes all the checks it should.