KYC Verification for Other Services Companies — UK Guide

UK law, primarily the Money Laundering Regulations 2017 and the Proceeds of Crime Act 2002, requires all businesses to conduct customer due diligence proportionate to money laundering risk. For 'Other Services' companies, requirements include: verifying customer identity through reliable documentation, obtaining beneficial ownership information for corporate customers, understanding business purpose and anticipated transactions, and ongoing monitoring of customer relationships. The FCA provides sector-specific guidance, and the National Crime Agency issues suspicious activity reporting requirements. Proportionality is key—a high-risk customer requires enhanced due diligence including source of funds verification, while lower-risk customers may require simplified procedures. Most 'Other Services' companies must register with relevant professional bodies if regulated (e.g., solicitors, accountants), triggering additional compliance obligations beyond general AML requirements.

The PSC register, maintained by Companies House, identifies individuals with significant control (typically 25%+ ownership) in UK companies and must be central to any KYC program. During customer onboarding, retrieve PSC information for all corporate customers and verify each PSC's identity, background, and legitimacy. Cross-reference PSCs against sanctions lists, PEP databases, and adverse media sources. Assess whether the PSC structure appears reasonable for the business type—for example, a boutique consulting firm with 15 PSCs across multiple jurisdictions may warrant deeper investigation than a standard partnership structure. The PSC data (241,981 records with average 14.1 per company) suggests many 'Other Services' companies have complex structures requiring detailed verification. Obtain written confirmation from the customer that PSC information is complete and accurate, and re-check PSC registers quarterly or upon any disclosed changes to ownership.

Enhanced due diligence (EDD) is essential when ownership concentration scores are elevated (sector average 13.4), directors have regulatory histories, or PSC information appears opaque. Recommended EDD procedures include: requesting certified corporate documents demonstrating incorporation and legal standing; obtaining detailed organizational charts showing beneficial ownership chains to ultimate individuals; demanding source of funds documentation for capital injections; conducting background investigations on all identified beneficial owners; seeking independent references from established business contacts; obtaining tax clearance certificates or regulatory confirmation from relevant authorities; and requiring legal opinions on corporate structure legitimacy from qualified professionals. For companies with offshore beneficial owners, verify business rationale for that structure (international operations may justify this, pure tax avoidance concerns may not). Document all EDD findings comprehensively, and maintain quarterly monitoring including sanctions screening updates. If beneficial ownership cannot be satisfactorily established or appears deliberately obscured, relationship termination should be considered despite transaction attractiveness.

The Regulations require ongoing monitoring, which for 'Other Services' typically means: annual comprehensive reviews of all KYC information for standard-risk customers (minimum); quarterly reviews for medium-risk or higher customers; immediate updates when the business notifies you of material changes (ownership modifications, director changes, registered address relocation, new business lines); and continuous sanctions screening updates. Real-time monitoring systems should flag any Companies House changes (including director appointments/removals, PSC modifications, or accounting filing changes) automatically. For the 129,145 companies formed since 2020 in this sector, more frequent initial monitoring (quarterly for first 2 years) is prudent given evolving compliance maturity. Document all monitoring touchpoints in your compliance records. If you identify discrepancies between information held and Companies House records, contact the customer immediately to reconcile, and escalate to your compliance officer if explanations are inadequate. Annual KYC refresh should involve requesting updated declarations from customers regarding beneficial ownership, business activities, and transaction expectations.

Any suspected money laundering must be reported to your Suspicious Activity Report (SAR) filing system and subsequently to the National Crime Agency's Financial Intelligence Unit without customer notification (tipping off is illegal under the Proceeds of Crime Act 2002). Do not proceed with transactions while investigating. Document all findings, including: specific indicators identified, relevant dates, transaction details, customer communications, and your analysis. Report to your Money Laundering Reporting Officer (MLRO) immediately—do not delay. The MLRO will determine whether a Suspicious Activity Report to the NCA is required. While the SAR process is underway, you must continue normal business but enhanced scrutiny is applied. Failure to report suspected money laundering carries criminal penalties (up to 14 years imprisonment) and substantial fines. The indicator could relate to sanctions evasion (common with complex PSC structures suggesting beneficial ownership concealment), fraud (transaction patterns inconsistent with business purpose), or terrorist financing. Once the NCA acknowledges your report, it becomes your safe harbor legally, but report promptly—delays undermine the effectiveness of the entire AML/CFT system. Consider relationship termination if the customer cannot adequately explain the concerning indicators.