Anti-money laundering

Also called AML, KYC, Know your customer, Customer due diligence

Duties to check who you are dealing with, applying to specific regulated sectors — and increasingly asked about by everyone else.

What it means

Anti-money laundering regulations require businesses in regulated sectors — accountancy, legal services, estate agency, high-value dealers, financial services and others — to verify customers' identity, understand the purpose of the relationship, monitor transactions and report suspicions.

Know your customer is the identity verification part.

Why it matters

If your business is in scope you must register with the relevant supervisor, appoint a nominated officer, carry out a written risk assessment, train staff and keep records. The penalties for not doing so are substantial and include criminal liability.

If you are not in scope, you will still meet it: banks and larger customers apply their own checks, and onboarding stalls when your Companies House PSC information does not match reality.

What it looks like in practice

Check whether your sector is in scope — the list is specific and includes some businesses that do not think of themselves as financial.

Where it applies: risk-assess each client, verify identity and beneficial ownership before acting, apply enhanced diligence to higher-risk cases, and report suspicion to the National Crime Agency through a suspicious activity report.

Tipping off — telling the customer you have reported them — is itself an offence.

What to watch out for

Assuming a long-standing client needs no checks. Ongoing monitoring is part of the duty.

High-value dealer rules, which catch businesses accepting large cash payments regardless of sector.

Where to get proper advice

HMRC or your professional body, depending on which supervises your sector. Get this one right rather than approximately right.