All You Need To Know About Anti-Money Laundering Checks
Discover the ins and outs of AML checks, including how they work and whether they can affect your credit score.
07.01.25
Jasmin
The name might sound ominous, but anti-money laundering (AML) checks are a normal and essential part of the property-buying process.
They’re a legal requirement for all banks and organisations such as car dealerships and estate agents. Before they can accept and handle large sums of money, AML checks are carried out to confirm your identity and ensure the funds you’re depositing have been earned or gifted legitimately.
Let’s take a look at what money laundering is and how it works, who performs AML checks, what you need to provide when asked, and whether anti-money laundering checks can affect your credit score.
What is money laundering?
This is the technique criminal organisations use when they want to hide the origin of their illegally acquired funds.
The idea is to make stolen money appear as if it was earned legally while distancing the criminals from the possibility of prosecution.
Essentially, criminals disguise their profits by taking ‘dirty’ money and ‘cleaning’ it – hence the ‘laundering’ part of the name. For example, they might buy a restaurant or rental property and mix their shady gains with the legitimate profits of their lawful business. Then, they extract the money from the business to make it look like it was earned honestly.
Ultimately, this makes it more difficult for law enforcement agencies to trace the money back to illegal activities.
How does money laundering work?
According to the United Nations Office on Drugs and Crime (UNODC), money laundering is a single process that can be broken down into three distinct stages:
Placement: This first stage involves moving funds gained from criminal activity into the financial system. Money launderers are at their most vulnerable during the placement stage, as placing a large amount of cash into a bank account (or using it to buy a property or business) can raise suspicions and trigger anti-money laundering checks.
Layering: Also referred to as ‘structuring’, layering is the most complex part of money laundering. It often involves moving illegal funds overseas to try and distance them from the original source. The goal is to obscure the audit trail and break the link with the criminal activity.
Integration: During the final stage, the money is returned to the criminal from what appears to be a legitimate source. Sometimes, it’s in the form of ‘clean’ cash. Other times, it’ll be a piece of art or a property investment.
Can money ever be laundered unintentionally?
While money laundering is a deliberate act by criminals and co-conspirators, it can involve innocent people who help criminals transfer and ‘clean’ stolen money without realising it.
This can often happen after falling victim to an online scam.
For example, an unsuspecting person might be contacted via social media or a dating app and lured into a romantic relationship. They then provide their own account to receive and transfer fraudulent money, unknowingly legitimising the funds in the process.
Remember to never share your financial information with someone you don’t know and trust. And if you think someone is trying to take advantage of you, cut all communication and report them to your bank and the police. Read more about how to identify and stop fraud here.
Who performs anti-money laundering (AML) checks?
Traditionally, banks carried out checks when handling large amounts of money, especially if the funds were being transferred from overseas.
However, due to the ongoing threat of global crime, corruption, and terrorism, many countries have expanded their legally required anti-money laundering controls to other businesses and professions that deal in large amounts of cash, including:
Car dealerships.
Casinos and betting companies.
Pawnbrokers.
Jewellers.
Estate agents.
Accountants.
How do anti-money laundering checks work?
Depending on who performs them, AML checks are designed to ensure that business investors, property buyers, and customers are who they say they are and that they’re investing or spending their own legally acquired money.
The checks typically start by verifying your identity on the Electoral Register. However, you may also be asked to provide documentation to confirm your name and address.
What do I need to provide as part of anti-money laundering checks?
When it comes to providing proof of identity, the following documents are usually accepted:
To verify your identity:
Up-to-date and valid passport.
Valid UK driving licence.
Birth certificate.
To prove your current address:
Full driving licence (if not used to prove your identity).
Utility bill (such as a gas, electric, water, or broadband bill) issued within the last 3–6 months.
Local authority council tax bill for the current council tax year.
Recent bank or mortgage statement.
What can’t be used for anti-money laundering checks?
Keep in mind that some documents, such as provisional driving licences, mobile phone bills, and credit card statements, may not be accepted as proof of identity or proof of address.
Every organisation has its own criteria, and some may feel these documents don’t provide enough information to tick all the boxes.
When do anti-money laundering checks happen?
They can, in theory, be performed at any time. However, they’re usually only carried out when dealing with transfers for a large amount of money, such as paying a deposit for a house or buying a car.
You may also be asked to comply with AML checks and verify your identity when opening a new bank account or signing up for a gambling site.
If a parent or loved one is giving you money towards your deposit for a property, they’ll be asked to provide ID and verify where the funds have come from as part of anti-money laundering regulations. The bank may also ask for written confirmation that the money is a gift and not a loan to be repaid.
Read more: Anti-Money Laundering Checks When Buying a House: Your Guide
Why are money laundering checks important?
Banks and businesses carry out AML checks to protect themselves. They help ensure they’re not left out of pocket if a potential customer attempts to use their business to exchange stolen money for something more difficult to trace.
It’s also vital for businesses to demonstrate to customers, partners, and regulators that they’re taking all the proper steps to identify and prevent fraud and criminal activity.
Am I suspected of anything when given an anti-money laundering check?
You can relax – you’re not suspected of money laundering if you’re given an anti-money laundering check. They’re a legal requirement and carried out whenever someone makes a large cash deposit, purchase, or transfer.
Can anti-money laundering checks affect your credit score?
More good news – they won’t affect your credit score. AML checks are usually recorded as soft searches on your credit report to verify your identity. Don’t worry, soft searches don’t impact your credit score or ability to get credit unless they’re made for debt collection purposes.
How can I see my anti-money laundering checks?
If you want to see if you’ve had any anti-money laundering checks carried out on you (and find out which companies performed those checks), try Checkmyfile.
We give you access to the most detailed credit report you can get, which is the most detailed in the UK. It puts your complete credit history from Experian, Equifax, and TransUnion in one place, so you can have eyes across everything the credit reference agencies hold for you.