Going Virtual? Make Sure Your Virtual Office Is Compliant

Published on March 26, 2020 - By Jo Meunier (née Disney)

• Demand for remote tools has soared as many people are forced to work remotely due to the COVID-19 pandemic. 
• Virtual offices have emerged as a valuable solution for many as they don’t require a commitment to a physical office. 
• However, virtual office providers and users need to make sure that they are compliant with all legal requirements. 

As the COVID-19 pandemic sends more and more people home to work remotely, demand for remote tools and services is rising.

Among them, attention is shifting to virtual offices, as remote workers search for a more flexible workplace alternative that doesn’t require commitment to a physical office.

However, people who sign up to virtual office services are being urged to check the legitimacy of their chosen operator and ensure they are acting compliantly.

Different countries have different laws on virtual office compliance. Broadly speaking, the rules affect these key areas:

• Mail processing and forwarding: Virtual office users must give their legal consent for the operator to receive and handle mail on their behalf.
• Onboarding new clients: Customers must provide information, backed up with ID, so the virtual office operator knows who is using their address and any other services.
• Data handling: Any data, such as a customer’s ID, must be stored securely by the virtual office operator.

In the US, the key legal requirement relates to mail handling. To accept mail legally, every center must register with the USPS as a Commercial Mail Receiving Agency (CMRA).

Each virtual office client must give official consent with photographic identification, signed with the center operator or a notary as witness, for the center to handle mail on their behalf.

In the UK, virtual office compliance is governed by two official bodies:

1. HMRC – Anti Money Laundering
2. London Local Authorities Act – Westminster City Council

The downside is that both of these regulators require slightly different sets of information from clients, which can be difficult to understand and prolongs the onboarding process.

“It makes compliance seem overwhelming and complex,” said Simeon Howard, founder of Your City Office, whose platform lists over a thousand locations across the UK, Europe, Asia Pac and North America.

Platforms such as Your City Office are working to make the process easier. “We partner with operators and work with them to generate revenue by way of virtual office clients. Operators come to us because we capture the majority of compliance documentation, which saves them a lot of time and money.”

The platform itself handles most of this data capture, backed up by a manual vetting process.

“Our compliance platform manages the end-to-end onboarding process. When a client signs up to a virtual office through Your City Office, they have their own secure portal that tells them exactly what information we need, the type of identification, and so on.”

There are also specific requirements when scanning passports or other identification, such as scanning in colour and showing all four corners of the passport. Through Your City Office if the client uploads documentation incorrectly, either the system or the manual vetting process that follows will pick it up.

“It makes it easier for both client and operator and the whole process is watertight.”

Why are these checks necessary?

Before ID checks came into effect, some people were found to be exploiting the service. They were able to cover up fraudulent activity or scams by hiding behind their virtual office address while running illegitimate businesses.

That’s why official regulations are now being enforced, which includes registration to the USPS in the US and anti-money laundering regulations in the UK.

But the process is complex, with lots of different documentation required, and according to Simeon some operators still aren’t asking the right questions or requesting the right documents.

“When we first launched around 15 years ago, compliance wasn’t a factor. Now it is, and we’ve made a significant investment in developing the technology — half a million pounds — to take care of it both for our partners, and for us as a company.

“Alongside that we also offer training to educate operators on compliance, such as how to capture the right ID.”

What should virtual office users expect?

When signing up to a virtual office, business owners should expect to provide the following information:

• Photo ID – two types, such as a passport and a photo driving license
• Proof of residency
• Proof of forwarding address
• Proof of registered office
• If there is no named company director, the person paying for the virtual office will need to provide these details.

This process applies to any location. If a company is not asked for basic details along with proof of ID, they should question whether the virtual office service they are using is compliant.

Furthermore all identification and relevant documentation must be provided at the time of signing up. Missing documents can be provided later, but this slows the process down; the company can only start using their virtual office address once the entire process is complete.

Ultimately these due diligence checks are in place to protect the companies that use these services, and the operators themselves, to help keep virtual office environments as safe and professional as possible.

For more information on compliance or to discuss partnership opportunities with Your City Office, operators are invited to contact Simeon Howard: www.yourcityoffice.com (UK) or www.yourcityoffice.co (US).

Further resources:

• HMRC Money Laundering Regulations – Compliance
• London Local Authorities Act
• FlexSA – Virtual Office Compliance
• USPS – Commercial Mail Receiving Agency (CMRA)