How to create an AML checklist for your firm by Firmcheck

How to create an AML checklist for your firm by Firmcheck

Engaging a new business client is good news for your accounting firm’s growth and the stability of your firm’s revenues. But taking on the wrong client can be a costly error, especially if this new entity turns out to be involved in money-laundering activity. This is why carrying out robust Anti-Money Laundering (AML) checks on all new clients is such a vital compliance step. 

AML checks exist to give you the best possible overview of your new client’s business, their finances, transactions and the nature of their business activities. By putting these areas under the microscope, you can look for any potential red flags and areas of concern, and it’s in additive to getting to know your client.

So, what are the key steps to include in your firm’s AML checklist? 

We’ve highlighted the important areas to consider, and why they should be central to your due diligence process.

8 key components to include in your AML checklist

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An AML checklist is a vital part of your Know Your Customer (KYC) (or sometimes known as Know Your Client) process. To meet your Customer Due Diligence (CDD) responsibilities, it’s important to include the following key actions to ensure compliance with the rules for your region and to mitigate the risk of money laundering. 

1. Client Identification

• Obtain and verify the client's legal name, business name and relevant identification documents relating to the company.

• If engaging a limited company, partnership or director, identify the company’s records and filings with Companies House.

• Verify the client's residential or business address.

• Collect and validate the client's contact information, including phone numbers and email addresses.

2. Beneficial Ownership

• Identify and verify the beneficial owners of the client's business, including individuals who hold a significant ownership interest or have control over the entity.

• Collect the necessary documentation to establish beneficial ownership, such as shareholder registers or partnership agreements.

3. Risk Assessment

• Assess the client's risk profile based on factors such as the nature of their business, transaction volume, geographic location and known industry risks.

• Where necessary, conduct Enhanced Due Diligence (EDD) for high-risk clients, including politically exposed persons (PEPs) and clients in high-risk jurisdictions.

4. Source of Funds

• Determine the source of funds for significant transactions or account openings, making sure that they’re legitimate and derived from legal activities.

• Request documentation or evidence to support the source of funds, such as bank statements, tax returns or business financial records.

5. Suspicious Transaction Monitoring

• Establish robust systems and processes to monitor your client’s transactions for any unusual or suspicious activities.

• Train your employees to recognise red flags, such as frequent large cash deposits, complex transaction structures or unusual patterns of funds movement.

6. Record Keeping

• Maintain accurate and up-to-date records of customer information, identification documents and transaction details.

• Retain records for the required regulatory period, typically at least five years, and ensure these records are easily accessible for auditing purposes.

7. Compliance Program

• Develop and implement an AML compliance program, including written policies and procedures, training programs for staff and regular internal audits.

• Appoint a designated AML compliance officer responsible for overseeing the firm's AML efforts and ensuring ongoing compliance.

8. Reporting Suspicious Transactions

• Establish a clear process for reporting suspicious transactions to the appropriate regulatory authorities, such as the UK Financial Intelligence Unit.

• Educate your staff on how to recognise and report suspicious activities promptly, in accordance with legal and regulatory obligations in your territory.

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Firmcheck: taking away the headache of AML checks and ongoing management

Completing AML checks is a complex but necessary part of your engagement process. It's also worth noting that the specific requirements for AML and KYC checks may vary depending on the jurisdiction and regulatory framework that’s applicable to your firm. The checklist needs to be tailored to align with relevant laws, regulations and industry best practices.

The simplest and most effective way to complete these AML checks is by using tailored AML software tools, like Firmcheck.

Firmcheck is your one-stop shop for all your firm’s AML needs, allowing you to manage AML across the entire client lifecycle, including ID verification, PEPs, Sanctions checks, and ongoing due diligence.

Firmcheck helps you:

• Manage company, and individual AML checks all in one place 

• Keep a track record of all decisions and risks, with a simple intuitive AML workflow 

• Stay on top of ongoing due diligence with prompts and reminders for things like expired IDs 

• Meet your record-keeping and AML obligations 

Join the Firmcheck waitlist to stay up to date and be notified when we launch in September 2023.