At a glance
- KYC is a vital, mandatory risk management exercise for accounting firms.
- Technology is automating KYC processes, improving efficiency and the client experience.
- Upcoming Companies House ID checks will likely raise the standard for all KYC processes.
Know Your Client (KYC) procedures are a vital risk-management exercise for accounting firms. They trigger a range of information-gathering about client identities, their business activities, source of funds and beneficial owners.
None of these activities raises direct revenue for firms. But they are required for many practices. And efficient completion can help to protect a firm’s reputation, minimise the risk of fines, and reduce the chance of working with high-risk clients.
As cyber fraud rises, accounting firms are under greater pressure to adopt technology-led KYC processes. Some 3% of all UK businesses fell victim to fraud from cyber breaches in 2024.
A 2024 report from Firmcheck supports the need for accounting firms to get to grips with their KYC processes: 68% of accounting firms responding to Firmcheck said they had low to medium confidence in their current anti-money laundering (AML) processes.
And from 18 November 2025, Companies House will be making biometric and cryptographic ID checks mandatory for accounting firms that file on behalf of their clients. In time, this may raise ID checking standards across KYC too.
“I am fully expecting that updated AML regulations will require the same level of identification checks as Companies House.”
Andrew Coulson, Founder, My Finance Team
New technological solutions hold the potential to help firms manage increased requirements. They are automating processes and connecting and aggregating multiple data sources to reduce instances of data duplication.
How automation can cut the KYC workload
Many KYC processes are being re-engineered to fit into streamlined tech-led workflows.
Previously, ID checks were manual, requiring certified copies of passports. Now biometric tools handle a growing slice of this work, letting clients engage in the process remotely using their smart devices.
Kevin Lord is general manager at Firmcheck, an AML compliance software tool. He explains that many firms in this field no longer meet their clients face-to-face. “Biometric tools let them collect passports and also verify that documents are real. They also perform face recognition and make sure that the person who’s actually giving you that passport is that actual person.”
Also being automated is the changing of client listings of shareholders and directors at Companies House.
Beever and Struthers have built their own platform that automatically picks up changes and asks clients for relevant documentation.
“We pick all of this up automatically now … We just have an automated process that [spots] where a shareholder has changed, whether they are over the threshold, and [asks] whether we need to do an ID check for them,” says John Toon, tech strategy lead at Beever and Struthers.
Connected data reveals new risks
Tech-driven KYC platforms are reducing manual processes and the risk of conflicting data by connecting multiple data sources via the use of open APIs.
Connecting to practice management solutions, bank feeds, and CRM reduces the need to input data multiple times and can unearth new areas of risk.
Kevin Lord says, “If all these elements are on a single system, these different risk elements can start talking to each other and can be surfaced to accountants much easier.”
He cites the example of Firmcheck being able to analyse the bank feeds of a manufacturer and being able to identify a new supplier in a high-risk geography.
Nathan Keeley runs Summa Tech. Its tools aim to ease practice management, and they incorporate KYC checks. He believes that many firms are using automation for KYC but are yet to leverage further efficiency gains from connecting systems to each other.
“Processes may be automated and digital,” he notes, “but [they] are often reliant on multiple systems that don’t talk to each other, with data still needing to be transferred to [a] central database. Working and collaborating with different tools that connect together is efficient and results in less mistakes.”
Companies House changes will raise the bar
The incoming biometric and cryptographic ID checks at Companies House are separate to general KYC requirements, which presently allow for practitioners to ID check their clients manually.
In the short term this will require practitioners to ID-check their clients twice.
Andrew Coulson, founder of My Finance Team, points out that the ID and address checks now built into KYC are “significantly” less stringent than Companies House will require. And he believes it is inevitable that overall AML standards will be raised in line with Companies House standards.
“I am fully expecting that updated AML regulations will require the same level of identification checks as Companies House … If you are filing accounts and confirmation statements for a client you are going to have to comply with Companies House regulations.”
Della Hudson, founder of Minerva Accountants, believes that this will eventually lead to ID checks only needing to be completed once.
She adds: “I’m hopeful that Companies House verification means that we can rely on that for directors rather than having to do additional ID checks in the future too.”
Enhance your understanding of anti-money laundering with IFA’s AML Matters webinar series.
