You might be asking yourself, do you have to implement anti-money laundering (AML) and Know-Your-Customer (KYC) modules in your coworking space?
The short answer to that is yes, yes you do.
The explanation to this is quite simple. If your coworkers are allowed to use your addresses, it is important for you to implement an AML/KYC process to guide your decisions, to protect your business and your coworkers, and to stay compliant.
This is because criminals might use your community as support or as camouflage for illegal activities or as a hideout to get away from angry customers or vendors, none of which is something you want associated with your coworking space.
So, screening your coworkers (checking their credentials and whether they are who they say they are) before they sign contracts alleviates this risk.
And thats really all AML/KYC amounts to: a process of verifying and confirming the identity of the entrepreneurs and the nature and existence of the business.
WTF is AML and KYC?
If you are a business that deals with real estate and renting it out, it is mandatory that you have an AML/KYC process and policies in place.
It is important for AML and KYC policies that you verify the identity of the companies and the people who are in your coworking space. But it is even more important that you document the verification.
The European law regarding AML and KYC is form free. This means that you are able to set up your own system to verify and document the identities of your coworkers. Your system simply needs to cover certain areas to be compliant.
However, upon an audit if they find that your policies are not robust enough, or are not carried out systematically, you can get fined up to €10,000 per file.
Your module needs to have three steps to begin with:
- Verify that the person is who they say they are.
- Verify that the company information of the person is correct. It is important that you get information like:
- Who forms part of the company.
- The company name.
- Registration information of the company.
- Verify the identities of all the people involved in the company.
Once this is done you are obliged to monitor your coworkers’ activities, this is not a “one and done” situation. And in the event that certain criteria are met, you are required to report suspicious activity to the FInancial Intelligence Unit in your country.
Your responsibility regarding AML and KYC
A part of being AML and KYC compliant is making suspicious activity reports, which are called SARs (creative, right?) regarding suspicious activities that may occur when screening potential coworkers.
You are required to report suspicious transactions that happen in your coworking space after they are coworkers. In most countries, coworking regulations specify that you should make use of a subjective indicator—which means something in the transaction caused you to think that there might be possible whitewashing, fraud, or terrorism financing involved in the transaction.
There are also objective indicators. For example, if someone refuses to provide identification or documents, that is generally an objective indicator –, even if you don’t personally find it suspicious because you think the coworker simply found another space to make use of.
There is a ban on telling people that you are or have reported a transaction as well.
It is important to remember that you are not reporting a crime or saying that there was one. The idea is that if all the gatekeepers to business – banks, accountants, lawyers, notaries, landlords, and so on, report something a little off about a company, the aggregate of the reports will point to truly problematic situations that need to be investigated.
For this reason, most reports are not ever followed up on as they are one offs. Usually, though, you are informed once a case is taken up.
This protects your coworking space. If someone is found guilty of money laundering or whitewashing, you can use the report as evidence that you have done your part and to ensure the reputation of your space is protected.
We have created a list of important information that you need to consider in your coworking space to stay compliant.
Appoint a compliance officer
To make the process easier for yourself, appoint a compliance officer. This reaches the goal of having someone who is an expert in Anti Money Laundering/Know Your Customer laws and regulations.
They will ensure that your space stays compliant and also give recommendations if updates are needed to keep your AML module up to date.
This is someone who will need constant training, but in the end it is worth it to ensure that your coworking space stays compliant. The ways of getting around laws and regulations change every day, and so your officer needs to stay up to date.
Develop and apply written compliance policies and procedures
Developing a robust AML and KYC process and policies for your coworking space is very important. Work with your compliance officer to understand what a robust system is and how you can implement it in your coworking space.
Alternatively, you can make use of a ready use product like the Cowork.Tools AML and KYC system. This sets out policies and procedures for your coworking space and even automates the whole process.
Once these policies and procedures are in place, it becomes easier to screen potential coworkers.
Assessment and mitigation of high risks
The assessment and documentation of risks of money laundering and terrorist financing and measures to mitigate high risks is important to stay compliant.
Being able to properly apply the subjective indicator will only be possible if you know exactly what to look out for. By making yourself aware of high risk industries and countries you are already halfway there.
But, it is also important to document anything that seems out of place or suspicious. This can help you mitigate the risks if your suspicions turn out to be true.
An ongoing compliance training program
Constantly educating yourself and your compliance officer is important for your coworking space to be compliant. Staying on top of the newest regulations will ensure that you are always informed.
Most importantly, it is non-negotiable for your compliance officer to fall behind on regulations. So, once you have employed someone, make sure they attend constant training.
As always, these training sessions and courses should be documented to show that you stay on top of all things AML and KYC.
Review the effectiveness of policies and procedures, training programme and risk assessment
Lastly, it is of the utmost importance that you constantly do a documented review of the effectiveness of policies and procedures, training programmes and risk assessment.
To stay up to date with AML/KYC regulations means to constantly review and update your procedures. Again, make sure that everything is well documented as they happen.
The rules and regulations regarding AML and KYC can be quite confusing at times. Cowork.Tools is here to help you clear up that confusion. Our system automates the AML and KYC process, and gives your coworking space a fully qualified compliance officer, leaving you free to concentrate on running your coworking space to its full potential.