What are AML checks?

When applying for business finance in the UK, whether it’s a loan, commercial mortgage, or credit card, lenders are legally required to carry out Anti Money Laundering (AML) checks.

These checks are an essential part of the due diligence process, designed to confirm a business’s legitimacy and prevent financial crime. For business owners, understanding what AML checks involve and how to prepare for them can help avoid unnecessary delays when applying for funding.

What is an AML check?

An AML check is a legal process used by banks, lenders, and other regulated financial institutions to verify the identity of individuals and businesses. The goal of these checks is to prevent money laundering, terrorist financing, and other financial crimes by ensuring the people and companies applying for finance are genuine. AML checks are part of the UK’s wider compliance framework under the Money Laundering Regulations 2017, which require financial service providers to carry out “Know Your Customer” (KYC) checks before doing business with any new client. In the context of a business loan, AML checks help the lender to confirm:

• Who the key individuals and owners of the business are

• That the business is trading legitimately

• That the source of funds is lawful and traceable

What does an AML check involve?

While each lender may have their own process, most AML checks include several key stages:

1. Identity verification

You’ll usually need to provide proof of identity and proof of address for all company directors and any major shareholders. This might include:

• Passport or driving licence

• Utility bill, bank statement, or council tax bill (dated within the last three months)

Lenders will then verify these details electronically against trusted data sources to confirm their authenticity.

2. Company verification

Lenders will check your company information against public records such as Companies House. This confirms your registration details, company status, and any recent changes to directors or shareholders.

3. Beneficial ownership checks

For companies with multiple shareholders, lenders must identify and verify the beneficial owners (anyone who holds 25% or more of the business). This is to ensure transparency over who ultimately controls the business.

4. Sanctions and politically exposed person screening

The business and its directors may be screened against international sanctions and politically exposed persons (PEP) lists. This helps identify any individuals with higher risk profiles or links to restricted entities and countries. 

5. Source of funds and business activity

Depending on the size of the loan or the lender’s internal policy, they may also ask about how the business generates revenue and where its funds come from. Supporting documents such as recent bank statements or financial accounts can help verify this information.

Am I required to do AML checks on clients?

Not every business in the UK is legally required to carry out AML checks, but if your business operates in certain regulated sectors, you are. Businesses that fall under AML regulations include:

• Money service providers that are not supervised by the Financial Conduct Authority (FCA)

• Bill payment service providers that are not supervised by the FCA

• Accountants, bookkeepers, and tax advisers

• Financial and credit institutions

• Estate agents and letting agents

• Legal professionals (such as solicitors)

• High value dealers (businesses accepting or making cash payments over €10,000 on a single or linked transactions)

• Trust or company service providers that are not supervised by the FCA

• Art market participants that sell individual or linked pieces over €10,000

If your business provides any of these services, you must register with either HMRC or be supervised by a professional body, such as the FCA. You must put in place appropriate AML procedures which should include:

• Verifying the identity of clients and beneficial owners

• Monitoring ongoing business relationships for suspicious activity

• Keeping detailed records of checks and transactions

• Reporting any suspicious activity to the National Crime Agency (NCA)

Even if your business is not in a regulated sector, it can still be wise to carry out basic identity checks on high value or unusual transactions. This helps protect your business from potential fraud or reputational risk.

How long do AML checks take?

In most cases, AML checks are completed within minutes, especially when the information provided matches public records and documents are valid. However, certain factors can cause delays, such as:

• Inconsistent information (for example, outdated addresses or different name spellings)

• Complex ownership structures

• Manual verification required for international shareholders or flagged results

• Expired or unclear identification documents

To avoid these hold ups, you should make sure that all your company details are accurate and up to date before submitting a business loan application.

Why do AML checks matter?

While AML checks can sometimes feel like an extra administrative step, they play an essential role in protecting the financial system and ensuring that businesses operate transparently.

For legitimate businesses, these checks are also a sign of trust, they confirm you’re dealing with a regulated, compliant lender. And once your details have been verified, future applications with the same lender tend to move much faster.

How to prepare for an AML check

Here are a few practical steps that you can take to make the AML process smoother:

• Keep ID and address documents up to date for all directors and shareholders

• Ensure Companies House records accurately reflect your business structure

• Maintain clear financial records, including bank statements and trading history

• Be transparent about your business’s ownership and sources of income

Having this information ready can make a big difference when you’re looking to secure finance quickly.

Applying for finance

If you apply for finance, AML checks are just one part of the process, alongside credit score assessments, affordability checks and underwriting. With Capitalise, you can manage the entire funding journey in one place. You’ll be able to check your business credit score, apply for funding and compare lenders. When you apply you’ll also be supported by a dedicated funding specialist who will help ensure your application is complete and all required AML and KYC documents are in order. This way, if you receive an offer, your funds can be released quickly and smoothly.

By understanding what AML checks involve and ensuring your records are in order, you can save valuable time and keep your business compliant and finance ready.