Money laundering is a very recent change in statutory law around the world (although it has been going on since time immemorial) brought on by terrorist events over the last decade or so.
Money Laundering in the UK and elsewhere
In many countries including the UK you are required to record and keep proof of clients if you are a bookkeeper or accountant for money laundering purposes. This serves two purposes:
- Due dilligence
- Client Identity Proof
Due dilligence means you have taken the trouble to look at your client more closely by asking them to prove who they are. Client Identity Proof is just the evidence you can supply should something go awry with your client. That is, at some point, your client should become involved with money laundering (ML), terrorism, drug smuggling or any other criminal activity, which is why ML was brought in in the first place.
Many practitioners, and the vast majority of ordinary people see this as a typical example of beaurocracy, and I agree, however it is something you must do with every client you take on board, by law.
Money Laundering Proof
You will need photographic proof (driving licence or passport is acceptable) and proof of name and permanent address. The best source for that is a utility bill (gas, electric, water or telephone). Records should be retained for a minimum of five years, but retain them permanently to be safe.
When photocopying documents make sure you do not photocopy parts that are not relevant (eg. travel pages in a passport). In the UK you cannot use colour photocopies, they must be black and white. We are not sure what the requirements are for the USA, but I suspect they are similar.
Money Laundering and Inland Revenue
Finally remember that you must register with your Inland Revenue service (HMRC in the UK, where there is also a fee to pay). HMRC have a useful section on Money Laundering on their website.
Have you read our guide to running a bookkeeping business, money laundering is just another aspect you need to know about? Bookkeeping Business From Home