Key takeaways
- Anti-money laundering (AML) is the legal framework that requires banks to stop criminals using the financial system.
- Every regulated UK bank has the same obligations. Being asked for information isn’t a sign your business is under suspicion.
- Banks check who owns and controls your business, and how it makes money.
- The checks don’t stop once your account is open. Banks have to keep your details up to date.
What is anti-money laundering?
Anti-money laundering is the legal framework that requires banks and other regulated organisations to stop criminals using the financial system to move and hide illegally obtained money.
Money laundering is the process of making money from crime look like it came from a legitimate source. A criminal might, for example, push it through business accounts to disguise where it started.
This isn’t unique to one bank. Every regulated financial institution in the UK works under the same obligations. If your bank asks you for information, it's not a reflection on your business.
You can read more in the government’s anti-money laundering guidance.
Why banks are legally required to carry out anti-money laundering procedures
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 require banks to verify who they’re banking with and understand the nature of each business relationship. The Financial Conduct Authority (FCA) oversees how regulated banks follow these rules. You can read more about the FCA’s approach to financial crime.
When a bank asks for documents or information, it’s applying the same legal requirement it applies to every business customer. It’s not a sign that you’re under suspicion.
If you’re opening an account, our guide on how to open a business bank account walks you through what to expect.
What banks look for during anti-money laundering procedures
Why banks verify the directors and owners behind your business
Banks have to verify the people who own and control your business, not just the company. Anyone who holds 25% or more of the business is typically identified and verified, alongside directors and key account holders.
How banks assess your trading activity and the origin of your funds
Banks need to understand what your business does, how it earns money and what normal money flow through the account looks like. That builds an accurate picture of the relationship. It isn’t about questioning whether you’re legitimate.
Established small and medium-sized businesses with a clear trading history, filed accounts and an identifiable way of operating usually find this easy to satisfy. Our guide to the documents required for a business bank account covers what to have ready.
What triggers a more detailed review from your bank
Some businesses need a closer look, called enhanced due diligence. Common reasons include:
- Overseas directors or shareholders
- Complex group structures
- Certain industry types
- Cross-border operations
It’s a standard part of how banks manage risk, not a sign of wrongdoing. A bank that works with you personally will explain what extra information it needs and why. That makes it far less disruptive.
Why anti-money laundering obligations continue after your account is open
Banks must re-check customer information regularly during the relationship. Accounts a bank considers higher risk are usually reviewed every year. Lower-risk accounts are reviewed less often. This is a regulatory requirement, not something the bank decides to do on a whim.
So a request for updated details isn’t a cause for concern. If you respond quickly and keep your documents up to date, you avoid unnecessary disruption to your day-to-day banking.
Your Allica Bank relationship manager can help, so reach out to them if you’re not sure what a request means.
Frequently asked questions about anti-money laundering
What is the difference between anti-money laundering and know your customer?
Know your customer (KYC) is part of the wider AML framework. It’s the set of identity checks banks use to establish and verify who they’re working with. AML is the overall legal obligation. KYC is how banks put it into practice.
How long does the anti-money laundering process take when opening a business bank account?
It depends on how complex your business structure is and how quickly you provide complete documents. Simple structures with well-prepared paperwork generally move through faster.
Why has my bank asked for more information on an existing account?
Banks have to keep customer records current. A change in ownership, a new director or a big change in how you trade can all prompt a request. Reply quickly, and use your relationship manager as your first point of contact if anything is unclear.
Does my business also have anti-money laundering obligations of its own?
Some types of business do. Accountants, legal professionals, estate agents and high-value dealers must register with a supervisory body under the 2017 regulations. That’s separate from the checks a bank carries out on its customers.
Open a business account with a bank built for established businesses
If you’re going through onboarding or thinking about moving banks, a relationship-led bank can make the process feel more straightforward Find out more about the Allica business current account, or see how to switch to Allica.
Links were live and information was correct at the time of writing the article.
Disclaimer: This is information – not financial advice or recommendation.
The content and materials featured in this article are for information and education only, and are not intended to take into consideration any particular recipient’s financial situation. The product details referred to are correct at the time of writing. The information does not constitute financial advice or recommendation and should not be considered as such.
