From time to time, self-employed workers and entrepreneurs must provide their bank with certain documents proving both their identity and the economic activity they carry out.
Financial institutions are responsible for collecting this information,but they always do so at the request of the Bank of Spain (BdE). if the data subject does not provide this data in a timely manner, his or her bank account may be blocked.
The reason is that all financial institutions are subject to the rules on the prevention of money laundering and terrorist financing. Therefore, the bank must ask its customers for information on their identity and economic activity, as well as on the operations carried out (banking operations, balance, etc.), and periodically update this data.
if the self-employed worker or entrepreneur does not respond to these requests, or does not do so “sufficiently”, as explained by the BdE, his bank can block or cancel the account. And he has the right to do so,moreover,without the need for notice or prescription,”in all cases in which he deems it necessary to do so”.
As a rule, the bank must communicate the blocking or cancellation immediately after the adoption of the measure, providing at least a “generic” reason, i.e. a reference to the legislation that governs it.
Communication must be carried out through the available means of communication that the customer has made available, “and which are the most suitable to ensure that communication takes place effectively”.
Along with the Bank of Spain, financial institutions are obliged to inform the Revenue Agency (or the Provincial Treasury) about the banking operations of all taxpayers. This information is used to verify customer balances or uncover hidden business activities for the treasury.
This data is usually submitted on an annual basis, but the Ministry of Finance recently presented a public consultation document on expanding these formal obligations.The document proposes, along with broadening the typology of financial entities obliged to provide such information, to increase its frequency.
As the Treasury explains, the effectiveness of tax investigation and control actions is supported “to a large extent” by obtaining tax information provided by third parties.
The usefulness of this data is linked, “in certain specific cases, to the periodicity of their provision”. Therefore expanding it is “fundamental for the effectiveness of collection actions”.
Currently this information is typically submitted once a year, and the treasury proposes that it be done monthly to improve “collection risk assessment and cash flow collection investigation”.
Interview: Understanding the New Banking Regulations for Self-Employed Workers and Entrepreneurs
Editor: Welcome to Time.news! Today, we’re discussing an vital topic affecting self-employed workers and entrepreneurs. We’re joined by financial expert Dr. Isabel Torres, who will help shed light on the recent banking regulations enforced by the Bank of Spain (BdE). Thank you for being here, Dr. Torres.
Dr. Torres: Thank you for having me! This is indeed a very timely topic that many people need to be aware of.
Q: Can you explain why self-employed workers and entrepreneurs need to provide documentation to their banks?
Dr. Torres: Absolutely. Financial institutions are primarily responsible for collecting identifying and economic activity-related data from their clients. this is mandated by the Bank of Spain to prevent money laundering and terrorist financing. Self-employed individuals must periodically update their banks with information about their identity and economic activities to ensure compliance with these regulations.
Q: What happens if a self-employed worker fails to provide this information promptly?
Dr. Torres: If the requested documentation is not submitted in a timely manner, there can be serious consequences. The bank has the right to block or cancel the account without prior notice. This is a notable risk for anyone operating as self-employed, as it can disrupt their business operations.
Q: Can you clarify what the bank of Spain means by the term “sufficiently” when it comes to responding to bank requests?
Dr. Torres: Yes, the term “sufficiently” highlights that merely submitting whatever documents may not meet the requirements set forth by the bank. Individuals must ensure that the documentation they provide is comprehensive and meets the criteria outlined by their bank. Failing to do so could lead to account restrictions.
Q: How are financial institutions required to inform customers if their account is blocked or cancelled?
Dr. Torres: The banks must communicate any account block or cancellation promptly after taking such actions. They are required by law to provide at least a generic reason for the action, usually referencing the relevant legislation. Interaction should be done through the most effective means based on what the customer has authorized.
Q: Beyond banking interactions, how is this information shared with the tax authorities?
Dr.Torres: Financial institutions are also obligated to report banking operations to the Revenue Agency or Provincial Treasury. This ensures the clarity of financial activities, allowing tax authorities to verify customer balances and detect any discrepancies.currently, this data is shared annually, but there are discussions on increasing the reporting frequency.
Q: What implications does the proposed increase in reporting frequency have for self-employed individuals?
Dr. Torres: If implemented, monthly reporting could significantly increase the scrutiny under which self-employed individuals operate. It could also facilitate quicker identification of underreported income or hidden economic activities. This might encourage better record-keeping and tax compliance, but it also places more pressure on self-employed workers to stay organized.
Q: What practical advice would you offer to self-employed workers and entrepreneurs regarding these regulations?
Dr. Torres: My best advice is for self-employed individuals to maintain thorough and accurate records of their business activities and financial transactions. They should also be proactive in communicating with their banks to ensure all requested documentation is submitted on time. Staying informed about potential regulatory changes is critical for navigating this landscape effectively.
Editor: thank you, Dr. Torres, for providing such valuable insights into the regulations that impact self-employed workers and entrepreneurs.Your expertise will surely help our readers understand the importance of compliance and how to better manage their finances in light of these changes.
Dr. Torres: It was a pleasure to share this information! Thank you for the opportunity.