Compliance of Money Transfer Businesses:
The number of money transfer businesses has been expanding rapidly over the last few years. Every year higher number of remittances are sent across the world. Most of these remittances are sent from the developed countries to the developing ones. Going by the numbers of remittances, the number of money transfer businesses has increased as well. However, a money transfer business needs to follows some rules and regulations before they can begin the business. They need to be in compliance with rules and regulations set by their respective countries’ governments. The rules and regulations that all money transfer businesses in the UK need to follow are set by HM Revenue and Customs. Following are few of the rules and regulations which they need to follow.
Before the rules and regulations are stated, it is important to know why the money transfer businesses need to be in compliance with HMRC’s set rules. The reason why governments need money transfer businesses to observe rules and regulations is so that money cannot be transferred across the border for wrong means. For example, people can be transferred to finance illegal activities in other countries. Money transfer businesses can also be used to facilitate money laundering. Because money transfer businesses are easy to start and easily accessible to the public, these businesses have every chance to be used for the wrong reasons e.g. money laundering.
Money laundering is a serious crime. All countries around the world have set strict rules and regulations in order to combat money laundering. They do so because money laundering can have a very negative effect on the economy. Money laundering allows people to evade taxes, transfer black money (money earned through illegal means) to other countries and motivate earning through illegal means – all of which damage the economy. In addition, money transfer businesses need to follow these rules and regulations in order to allow the government to monitor the funds. In the past, money transfers have been made to finance illegal activities in other states. Therefore, it is very important to follow HMRC’s rules.
The money transfer businesses in the UK need to follow the regulations set by the HMRC. Whenever money is sent abroad, the money transfer businesses in the UK are meant to keep an identity-record of the sender of the money. According to the rules, a money transfer business need to have a valid ID of the sender. They can ask the sender for a photo ID like driving license or passport. They are also entitled to have contact information of the sender e.g. an address, phone number or in some cases an email.
In many cases the money transfer businesses may have a regular client e.g. a business that regularly sends money to countries to finance their businesses. In this case, the money transfer businesses need to verify the information given by the sender. They, however, do not need to verify information for every transaction. The verification for every transaction depends on each business i.e. some can choose to verify information more regularly than others. The verification part is effective when a large sum is transferred and does not apply to funds that are less than £1000 or in some cases £600.
The HMRC has a complete set of rules and regulations for the money transfer businesses to follow. Stating all the rules and regulations in detail would take a lot more space. But they are available on HMRC’s website. However, it is important to know why these rules are set, which has been stated above. Also, few of the main points of the regulations have also been stated which will be a good starting point.