Many types of business in most countries or jurisdictions nowadays must as a matter of law conduct anti money laundering checks on any customers before engaging in work on their behalf. Such checks are also known as KYC ("Know your Client") checks.
Failure to comply with relevant laws or related regulations can be a criminal offence and may sit outside the "Corporate Veil", so result in personal liability for directors - see "Directors' duties & the "Corporate Veil"".
In the UK, for example, the businesses obliged as a matter of law to conduct checks are detailed by the government on its website which can be accessed by clicking here; the obligations include obtaining proof of identities such as passports and proof of addresses in the form of recent utility bills and the like.
The Importance of such compliance in the wider picture is summarised at "The Relationship between Legal Compliance & Stressbusting™".
But following anti money laundering regulations, regardless of whether it is a legal requirement for the business in question to do so, can be a very good thing for reasons which can include the following:-
● it demonstrates good corporate governance
● it enables businesses to establish if prospective customers are credit worthy
● proof of address provides up to date details for the purpose of service of notices, demands or even proceedings should the need ever arise.
These checks should be run in tandem with checks at relevant public registries to facilitate early identification of any discrepancies which may be cause for concern - see, for example, "Companies House Beta: an invaluable free tool".
And any such checks (whether obligatory or not) should be conducted in full compliance with advertised data and privacy protection policies, as great care should be taken to ensure customers' valuable personal information is held safely and securely at all times - see "Register & safeguard Data to maximise its value".
If in doubt as to whether or to what extent checks are necessary for your business, take specialist advice given the serious repercussions of breach from a legal, financial, brand and publicity perspective.
If you can relate to the contents of this post and would like the value of our extensive expertise in this area, please reach out to us in confidence via our "Contact" page or at connect@stresstips4u.com
For further information in this regard, please consult our "Legal Notices" page.