Contractors' Questions: Do new anti-money laundering rules catch my umbrella company?
Contractor’s Question: It’s not something my umbrella company has told me about, so do I need to worry about the umbrella’s compliance since new Anti-Money Laundering rules were introduced late last month?
Expert’s Answer: In simple terms, no, you don’t need to worry if your brolly is a legitimate UK-based PAYE umbrella company.
The key difference with the original AML (Anti Money Laundering) regulations is that relevant persons are obliged to adopt a more risk-based approach towards anti-money laundering, in particular in how they conduct due diligence.
“If you’re a payroll services provider to a third party, you’re not an accountancy service provider for the purposes of the Money Laundering Regulations if you:
- provide software or hardware service support for payroll data processing, as long as you do not analyse or prepare any financial information
- pay invoiced service fees to self-employed people, umbrella companies, partnerships or other corporate service providers
- operate as a body like an umbrella company or a managed service company and carry out payroll functions for employees who are working on assignments for an end-user client
- provide recruitment or human resources management services and carry out payroll functions as a small part of your main business activity (for example, you might be an employment business that supplies or manages temporary or contract workers).”
So, there is no requirement for your compliant PAYE, UK-based brolly to provide you with any written statements, or DBS checks to confirm that they comply with the regulations.
And it’s actually much simpler than that -- check they have been audited properly by external auditors and ask for written confirmation that all payments are made via PAYE!
The expert was Lucy Smith, managing director of ContractorUmbrella Ltd. (Audited by Kingston Smith LLP)