KYC for New Accountants: Everything You Need to Know
KYC for New Accountants: Everything You Need to Know
As a newly started accountant, you face many challenges, but few are as critical as KYC (Know Your Customer). Do it wrong, and you risk fines, loss of authorization, and worst case, a career that ends before it really began. Do it right, and you build a solid foundation for a successful practice.
Let's go through everything you wish you knew from day one.
KYC Isn't Optional - It's Mandatory
First and foremost: As an accountant, you're subject to anti-money laundering law. This means you MUST:
- Have a written AML policy
- Risk assess all clients before cooperation begins
- Continuously monitor existing client relationships
- Document everything and retain for minimum 5 years
Think of it as your driver's license for the accounting industry - without it, you're driving illegally.
The 5 Pillars of Accountant KYC
1. Client Identification
It starts simple: Who is your client?
- For individuals: Name, ID number, address (verify with passport/driver's license + MitID)
- For companies: Registration number, signing rules, articles of association
- Remember: A copy of ID isn't enough - you must verify it's genuine
2. Beneficial Ownership
Here it gets complex. You must identify:
- Persons owning over 25% of the company
- Persons with controlling influence
- The entire ownership chain up to physical persons
Pro tip: The company registry is your friend, but don't trust it blindly.
3. Purpose and Intended Nature
Why does the client need an accountant?
- Mandatory audit?
- Tax optimization?
- Assistance with company acquisition?
The clearer the purpose, the easier to spot when something is "off".
4. Risk Assessment
Not all clients are equally risky:
- Low risk: Local carpenter, simple circumstances
- Medium risk: Import/export company
- High risk: Cash-intensive industries, complex structures
Your assessment determines how much you need to dig.
5. Ongoing Monitoring
KYC isn't "set and forget":
- Annual review of all clients
- Immediate reassessment at major changes
- Check against sanctions lists (minimum quarterly)
The Practical Start
Day 1: Establish your system
- Download templates from professional bodies
- Set up folder structure (digital recommended!)
- Make simple checklist to follow each time
Week 1: Your AML policy You MUST have a written policy covering:
- How you identify clients
- Your risk assessment criteria
- Procedures for ongoing monitoring
- When you report suspicion
Month 1: Test the system
- Review existing clients (if taking over practice)
- Document everything - including "old" clients
- Identify high-risk clients requiring extra attention
Red Flags You Must Never Ignore
As a new accountant, you may be nervous about losing clients. But these warning lights must NEVER be ignored:
- Client unwilling to disclose ownership
- Abnormally complex structures without business rationale
- Large cash transactions in non-cash industry
- Reluctance to document income sources
- Pressure to "overlook" rules
Remember: Better to say no to 10 good clients than yes to 1 bad one.
Digital Tools That Save Your Day
Manual KYC is time-consuming. Consider:
- Registry API: Automatic company data
- Sanctions list screening: Automatic checks
- KYC software: Gathers everything in one place
- Document management: Secure storage and easy retrieval
The investment pays for itself in saved time and fewer errors.
When Authorities Knock
Inspection isn't "if" but "when". Be prepared:
- All documentation easily accessible
- Can you explain each risk assessment?
- Is your AML policy updated?
- Do you have documentation for ongoing monitoring?
Treat each client as if inspection is looking over your shoulder.
Most Asked Questions
"How much should I document?" Everything. Better too much than too little.
"Can I trust other accountants' KYC?" No. You have independent responsibility.
"What if the client gets angry?" Explain it's legal requirement. Serious clients understand.
"How often should I update?" Minimum annually, but more often at changes.
Start Right - It Pays Off
As a newly started accountant, you have the advantage of building right processes from start. Veterans often struggle with old habits - you can do it right from day one.
Use the first month to establish robust KYC procedures. Yes, it takes time from billable work. But see it as investment in your future practice - and your ability to sleep well at night.
Because in the accounting industry, your reputation is everything. And nothing destroys a reputation faster than a money laundering case.
Welcome to the industry. Now you know what's required.
