Do you offer book-keeping services, or are you thinking of doing so? If so, then you’ll need to make sure you understand your responsibilities under the Money Laundering Regulations and the Data Protection Act.
The Money Laundering Regulations came in to force in 2007 and are aimed at preventing money or assets that have been obtained criminally being exchanged for money or assets that are ‘clean’. You have to stop your business being used for this purpose and put controls in place to check the identity of clients. If you’re a book-keeper then you are an Accountancy Service Provider and will need to be under the supervision of a professional body. If you have worked your way professionally through an organisation such as the Association of Accounting Technicians or The International Association of Book-keepers then they may award you a practising certificate and cover your business. If you’re not in such an organisation then you’re likely to have to register with HMRC directly.
The regulations apply to the smallest of book-keeping businesses, even if you’ve only got one client and even if another accountant prepares the accounts from the transactions you’ve been logging. Before you start work with any client you’ll need to check their identity, you’ll need to monitor their business activities as you work with them and you’ll need to keep safely all documents that relate to their identity and financial transactions. If you decide that there are reasonable grounds to suspect money laundering then this must be reported to the Serious Organised Crime Agency before those transactions are completed.
The keeping of documentation isn’t onerous if it’s done at the start of a new business relationship as part of the set-up procedure. In 2007 when the regulations came in to force, the more difficult task was persuading clients that had been on the books for several years that they should suddenly provide proof of their identity. Make it easy and don’t start work with someone until you’ve got everything that you need.
You can get more information on Money Laundering on the HMRC website here http://www.hmrc.gov.uk/mlr/getstarted/intro.htm
If you process personal information for accountancy and auditing you’ll also need to notify the Information Commissioner’s Office that you are a Data controller. In fact any organisation that processes personal information must do so unless they are exempt, and there are very few exemptions for businesses. The Data Protection Act 1998 states that those who record and use personal information must follow the principles of “good information handling” – which are that data shall be fairly and lawfully processed, processed for limited purposes, adequate, relevant and not excessive, accurate, not kept for longer than necessary, processed in accordance with the data subjects’ rights, secure and not transferred to countries outside the European Economic Area without adequate protection.
See http://www.ico.gov.uk/for_organisations/sector_guides/business.aspx for more information and some checklists to help you comply and determine if you need to notify. If you need to register then it’s wise to apply directly from their website. There are some bogus agencies around that have been asking for much more than the £35 a year that it costs to register.
Professional Indemnity Insurance
If you’re looking after your clients’ book-keeping then anything that you recommend to them may be considered advice at some time in the future. If you’ve got something wrong and then a relationship later goes wrong then there could be serious financial consequences. You should consider Professional Indemnity Insurance right from the start so that you have some legal cover if you make an error or omission in your work that has implications for your client. You should try to put some contractual limitations on liability in your contract with your client when you start working together as professional indemnity insurance will have a set limit on the amount that the insurer will pay, whereas a claim against you might be unlimited in amount. It’s important to keep cover in to the future as a claim can be brought many years after services are complete and you have to be covered at the time of a claim, not the time that you did the work.
You can look for a British Insurance Broker on http://www.biba.org.uk/Business/ConsumerHome.aspx
Setting everything up seems quite scary and will take some time investment at the beginning but will force you to look at the way you work and have everything in place so hopefully you’ll be able to get on with your job as a book-keeper without too much worry in the future.