Anti Money Laundering

When it comes to Anti Money Laundering supervision, we know a lot of our fellow Virtual Assistants are being left in the lurch by HMRC – finding it impossible to get a straight answer as to whether or not they need to register. So, we’re here to help break it down for you.

Who needs to register

If you’re an accountancy service provider, you need to register. This includes bookkeeping. Bookkeeping is defined as “the activity or occupation of keeping records of the financial affairs of a business”.
By definition, this includes (but is not limited to) raising invoices, entering expenses onto a spreadsheet, entering information to accountancy software etc.
If you provide any bookkeeping services, you are legally required to register for Anti Money Laundering supervision. Trading whilst not registered is a criminal offence. It can result in a fine or even prosecution.
We can see how it might seem extreme for those who feel they are just completing data-entry, then passing onto an accountant for review. Surely the onus should be on the accountant? However, this data entry is still technically bookkeeping, as the data itself is financial. If you’re working with financial data, HMRC expect you to have the expertise to recognise tax avoidance, evasion and fraudulent transactions.

Why you need Anti Money Laundering supervision

The National Crime Agency estimates that 100bn of corrupt money is laundered in Britain every year. HMRC estimates that tax avoidance and evasion cost us 6.9bn in 15/16. Richard Murphy, who runs website Tax Research UK, argues that tax evasion alone cost us 8.4bn in the same year. It’s clear that Anti Money Laundering regulations are there for a reason. HMRC rely on accountancy services providers to assist them in tracking down and prosecuting white collar criminals in the UK.
If you provide bookkeeping services, you must notify the authorities through a Suspicious Activity Report if you suspect any wrongdoing. If you don’t feel you have the skill to recognise Money Laundering, then you should not be providing bookkeeping services.
Certified bookkeepers, such as those who have a practice license through the Institute of Certified Bookkeepers, will often be supervised for Anti Money Laundering through their professional body. However, if you’re without a practice license, you’ll need to register directly with HMRC.

Will it benefit you and your business

It’s completely understandable that you might not want the extra business expense. It’s 100 to apply, then 115 for each of the premises you include in your application – with an annual renewal fee of 115 per premises. There are also new regulations, requiring you to pay an additional 15 per additional premises as of December 2017. As of November 2017, you’ll also have to complete an approval test. This costs 40 and is to check you for relevant criminal convictions.
However, think of this as an investment. Savvy clients want you to be registered for Anti Money Laundering supervision. Plus, you’ll have the opportunity to educate clients who haven’t a clue what AML is. With the release of the Paradise Papers, tax avoiders and evaders are the villains of the day. You can posit your supervision as a reason for clients to choose you over a less scrupulous bookkeeper. Simply put, it shows you’re legit.
Moreover, you should be carrying out due diligence on your clients anyway. Being supervised for Anti Money Laundering will give you a kick up the bum, encouraging you to research your clients and take risk assessment seriously, protecting you and your business.
If this all seems like overkill, perhaps it’s time to rethink your service offering. From a cost/benefit perspective, work out if the profits you make from the bookkeeping side of your business justify the investment of Anti Money Laundering supervision. If they do, and if you enjoy the bookkeeping side of things, why not grow and market that side of your business? Get studying, qualify as a bookkeeper and get a practice license. Then you can pass the benefit of your expertise onto your clients. Everyone wins!
Remember, it’s not just a tick box exercise. There are responsibilities that come with being registered so make sure you’re happy with those before signing up. If you have questions, or want to learn more, feel free to get in touch.
It’s also important to remember that all of this uncertainty could be avoided if HMRC would provide a clear, black and white guide to who needs to register. Hopefully they will soon.