If you work in accounting, you may be asked to run anti money laundering checks on the people and businesses you serve. These checks can feel like extra paperwork, but they exist for a reason. They help stop criminals from hiding dirty money inside everyday financial activity.
This guide breaks down what anti money laundering (AML) checks are, who has to do them, and what the basic process looks like. It is a general explainer, not legal advice. Always confirm your exact duties with your professional body or a qualified compliance adviser.
What Anti Money Laundering Checks Are
Anti money laundering checks are steps you take to confirm who your client really is and where their money comes from. The goal is to spot activity that does not add up before it becomes a problem.
A big part of AML is know your customer, often shortened to KYC. KYC is the work you do to verify a client's identity, usually when you first start working together. You cannot really meet your AML duties without solid KYC in place first.
The wider AML framework also includes ongoing monitoring, recordkeeping, and reporting suspicious activity. KYC is the front door, and AML is the whole house.
Who Has to Do These Checks
Many regulated businesses must perform AML and KYC checks. The list typically includes banks, payment companies, insurers, law firms, and accountants who handle client money or financial transactions.
For accountants, the rules often kick in when you provide services like bookkeeping, tax work, company formation, or handling client funds. If your work touches the movement of money, you are usually in scope.
The exact rules depend on where you practice and which professional body oversees you. Smaller firms and sole practitioners can still be covered, so do not assume size gets you off the hook.
The Basic Customer Due Diligence Process
The core of AML for accountants is customer due diligence, often called CDD. In practical terms, CDD and KYC describe much of the same work.
Most CDD starts at onboarding and follows a few common steps:
- Verify the client's identity using reliable documents or data.
- Identify the people who really own or control a business client.
- Understand the purpose of the relationship and the source of funds.
- Assess the risk the client presents and set a monitoring level.
The depth of these checks can scale with risk. Lower risk clients may get simplified due diligence, standard clients get normal CDD, and higher risk clients get enhanced due diligence, which means digging deeper before and during the relationship.
Spotting Red Flags
Red flags are warning signs that money may not be clean. No single flag proves wrongdoing, but several together may call for a closer look.
Common red flags can include:
- A client who is reluctant to share basic identity details.
- Funds that do not match the client's known income or business.
- Complex ownership structures with no clear business reason.
- Requests to rush work or skip normal checks.
- Frequent large cash transactions that seem out of place.
If something feels off, your duty is usually to investigate further, not to ignore it. Where suspicion remains, you may need to file a report with the proper authority and avoid tipping off the client.
Keeping Good Records
Recordkeeping is a quiet but important part of AML. If a regulator or investigator ever asks, you want to show your work.
Most rules expect you to keep copies of the identity documents and CDD information you gathered, along with notes on your risk decisions. Retention periods vary, but several years after the relationship ends is common.
Good records also protect you. They show that you took reasonable steps, which can matter a great deal if a client turns out to be a bad actor.
A Note on Relying on Others
You may sometimes rely on another regulated professional, such as a bank or law firm, to complete part of the due diligence. This can save duplicated effort.
Be careful, though. Even when you rely on someone else's checks, you usually remain responsible for meeting the rules. If their work falls short, the liability can still land on you.
How Everyday Banking Fits In
AML checks are about institutions watching money flow, but the same idea matters for regular people managing their own cash. Choosing accounts with clear fees and easy tracking makes your own money story simple to explain. If you are weighing where to keep day to day funds, our guide on how to choose the right checking account walks through the basics.
For anyone on a tight or non traditional budget, a fee friendly everyday account can help you keep direct deposits, spending, and savings in one tidy place. It also helps to understand the purposes of savings and checking accounts so each dollar has a clear home. Current is one option many people use for low fee everyday banking with early direct deposit features.
Current Banking
Current Banking
Current is a mobile-first banking app with no monthly fee and no minimum balance. Members can earn up to 4.00% APY with a qualifying direct deposit of $200, receive direct-deposit paychecks up to 2 days early, and overdraft up to $200 fee-free.
Standout feature
4.00% APY on Savings Pods (with a $200+ qualifying direct deposit) plus paycheck up to 2 days early — both included on the standard account for free
Fees
Free
Pros
$0 monthly fee; up to 4.00% APY on Savings Pods with qualifying direct deposit; paycheck up to 2 days early;
Cons
No physical branches
Chime is another popular fee friendly account that can work well for people who want simple mobile banking without monthly maintenance fees. Clear records and steady deposits make your finances easier to understand, which is the same spirit behind solid client due diligence. If past banking trouble is a worry, see our notes on a checking account for bad credit history.
If you are also working on personal credit while you manage your books, Firstcard offers tools focused on credit building for everyday users.
Chime
Chime
- Fee-free banking plus early pay access - Overdraft up to $200 without fees - 5% cash back and build credit everyday. - 3.75% APY on your savings.
Standout feature
No credit check, no interest, no annual fee, and no minimum deposit required.
Fees
$0
Pros
Fee-Free Banking and Get paid up to 2 days early
Cons
App/online-only support, no branches
Frequently Asked Questions
What is the difference between AML and KYC for accountants?
AML is the wider set of rules and controls used to detect and prevent money laundering. KYC is the identity verification part that usually happens at the start of a client relationship. KYC sits inside the broader AML framework.
Do small accounting firms have to run these checks?
In many cases, yes. AML rules often apply based on the type of work you do, not the size of your firm. Sole practitioners and small practices can still be covered, so it is wise to confirm your duties.
What should I do if I spot a red flag?
A red flag usually means you should investigate further rather than ignore it. If real suspicion remains after looking closer, you may need to file a report with the appropriate authority and avoid alerting the client. Check your local rules for the exact steps.
How long should I keep AML records?
Retention periods vary by jurisdiction, but keeping records for several years after a client relationship ends is common. Good records can show that you took reasonable steps if your work is ever reviewed.
