In line with the 5th Anti-Money Laundering Directive (January 2020), forming new companies is an activity which requires Inform Direct, as a provider of formation software, to carry out AML checks.  The AML check is done in slightly different ways depending on whether or not you are a Business Stakeholder in the company that you are intending to form. 

The AML check is what the £7.10 fee relates to.



 

Broadly, the different approaches for this AML check can be split into 2 categories:


  • Retail Formation (one where you are going to be a director/PSC of the new company) - marked 1 in the below image; or
  • Professional Formation. (one where you are forming the company for someone else) - marked 2 in the below image.


Here is a explanation of the two approaches:


Retail Formations

Here Robert Smith wants to set up Robert Smith Trading Limited.  Once it is established that the new company name is available (using the Inform Direct name checker) then Robert Smith who will be owner, PSC and director of the new company will need to provide his I.D. This is done as a step in the formation process. It will involve Robert having his photo taken by his laptop and and providing a photograph of his passport or driving licence and the software checking that the ID is bona fide and in date. There is a cost of £7.10 to run this check which is payable whether or not the incorporation is successful. This £7.10 is payable in addition to the other retail formation costs. Please see How Do I Form a Company of Which I Am a Director And/Or PSC? for further guidance. 


Fortunately, there is a simplified procedure if your firm already carries out AML checks, this is known as a Professional Formation. In this case there will be no £7.10 fee



Professional Formations

Here, before any companies are formed, we carry out a one-off AML (renewed every 3-4 years) on the entity wanting to form new companies.  However, this is only possible if the entity is themselves regulated (See here for a full list of recognised bodies) and they carry out checks on their underlying individuals forming the new company.  It is perhaps easier to understand the concept of a Professional Formation if you imagine that a firm of accountants or lawyers are wanting to use the formation tool.  Here we would seek confirmation that the firm e.g. ABC Accounting Services Ltd is regulated and then we need to see ID for the individual(s) who own the firm. In this case there will be no £7.10 fee.


To benefit from the simplified professional Formation procedure, please see this guide which details the checks we will need to conduct against you/your firm.