New money laundering rules might apply to you

New regulations designed to tackle money laundering will put a greater burden on businesses than ever before. Many companies will have to implement new procedures to avoid getting a fine, or worse, says Ross Wellman, Vincents Solicitors commercial director.

Business is becoming the first line of defence against money laundering and terrorist financing. The list of firms subject to the new regulations is lengthy, and is not limited only to banks and financial institutions.

Any business undertaking a series of defined financial activities, such as lending, leasing and payment services, to name but a few, could fall under the regulations. It could, therefore, impact on everyone from lawyers and accountants, to estate agents, casinos, car dealerships and auction houses.

These companies are expected to implement a raft of new procedures, and are at risk of severe punishment for non-compliance, including steep fines for simply neglecting to keep proper records.

The rules, which have just come into force, demand these businesses abide by strict guidelines to be clear about their customer’s true identity, understand their client’s background and motivation for the deal, and take adequate measures to establish the source of funds.

Robust due diligence procedures must become official policy within the business, with staff trained to enforce them, and a senior level person to take responsibility for keeping records and reporting any suspicions to the relevant authorities.

A failure to draw up and implement the policies, could itself attract a penalty, regardless of whether money laundering is actually suspected to have occurred.

Worryingly, there are even greater repercussions if a crime has taken place and there is no proof that the procedures were in place and followed.

It is a necessarily complicated piece of legislation that businesses and employees should ignore at their peril. It could prove costly in both financial and reputational terms.

Find out if the rules apply to you and seek help in identifying and implementing the policies needed to keep your business compliant, contact