Accountants break down the steps they’ve taken to ensure AML compliance

Anti-money laundering (AML) compliance is a varied and detailed area, which can be confusing and intimidating. Here, accountants explain how they’ve tackled issues.

AAT is an AML supervisory authority, and we regulate most but not all of our licensed members under the Money Laundering Regulations. We understand that AML requirements can be time-consuming, difficult and a full-time job in their own right. Bigger firms may employ someone to carry out the work, but sole traders must go it alone.

During our regular compliance reviews, we find certain issues come up more than others. Examples include:

1. no documented AML policies, controls, and procedures
2. annual AML compliance review not conducted
3. firm-wide risk assessment not undertaken
4. risk assessment not completed as part of initial client due diligence (CDD)
5. not adequately verifying clients’ identity
6. ongoing CDD not carried out
7. no procedures to report discrepancies to Companies House concerning persons of significant control
8. AML training not kept up to date
9. not understanding the scope of the licence area Trust and Company Service Provider (TCSP) and ensuring the firm is approved to provide this service.

We spoke to AAT members about the policies, controls, and systems they’ve put in place, as well as the challenges they faced in the process.

Accountants must now be more than finance people

Natalia Micu AATQB, Freelance Accountant and Management Accountant at Novenary

Due diligence should always be an important habit for all accountants – and more so now. My approach is to read and research as much as I can and ensure client documents and sensitive material is always backed up.

These days, accountants must be more than finance people – we must also know the law and how and when to report AML concerns and suspicious activities. We must be sceptical, checking identities, addresses and validity of information.

For most accountants following correct AML guidance, AML compliance takes about a quarter of their time from firm-wide risk assessments, due diligence and transaction monitoring. This time can not be invoiced but it is still essential to do.

Verdict: To comply with AML legislation, accountants must be more than finance people – we must also know the law and how and when to report AML concerns and suspicious activities.

Accountants must stay abreast of ever-evolving AML regulations

Ann White FMAAT AATQB, Abacus Accountancy & Payroll Services Ltd

AML compliance should not be regarded as a regulatory hurdle for accountants. Rather than viewing AML compliance as a regulatory obligation, we should embrace it as an opportunity to contribute to a more secure financial environment.

I adopt a positive approach to AML compliance. AML compliance provides an opportunity to know our clients and understand their businesses. By conducting thorough due diligence as part of AML procedures, we can gain insights into the nature of our clients’ operations, their risk profile, and business structure.

AML compliance offers accountants an opportunity to expand our skill set. We need to stay abreast of the ever-evolving AML regulations and this requires continuous learning and adaptability. A commitment to ongoing education only enhances our professional competence.

AML processes and procedures are an integral part of the day to day running of my business. My key tips for keeping on top of AML compliance are:

• familiarise yourself with the AML regulations and the requirements of your supervisory body
• ensure that you have policies and procedures in place and review them regularly
• make use of the various tools and software available to assist you with compliance
• keep up to date with AML changes and don’t overlook CPD in this area
• integrate AML compliance into your day-to-day working
• keep adequate records as evidence of compliance
• adopt a proactive not a reactive approach – leaving AML compliance until you have time to catch up is a recipe for disaster.

Verdict: Accountants should stay abreast of ever-changing AML regulation and view compliance as a way to contribute to a more secure environment.

AML can be confusing, but we’re here to help

Professional Standards, AAT

We understand that AML is a daunting area for some licensed members. As a regulatory body, we have a duty to help licensed members stay compliant and one means of doing this is through the practice assurance reviews.

However, as an AML supervisory authority, we are also obliged to uphold the law. Therefore, any breaches identified during a practice assurance review may require action under AAT’s Disciplinary Regulations. The practice assurance reviews are not there to catch licensed members out but are used as a means of ensuring that they are adhering to relevant laws and regulations.

Fortunately, some of the most-flagged issues as highlighted in the introduction are quite simple to resolve.

For example, points 1-7 can be addressed by using and adapting AAT’s templates for licensed members, available in the Professional Zone > Licence Zone > AML supervision and support.

Keep your AML training up to date by using our resources, for example, Knowledge Hub, AAT Comment and AT Magazine. Don’t forget – licensed members are required to regularly review their CPD, and AML is a part of this.

Finally, and perhaps most importantly, licensed members really must know which services they are approved to offer, as providing any service outside the scope of a licence may be grounds for action under the Disciplinary Regulations or termination of a licence.

If in doubt, you must check to avoid making a mistake like the one in point 9, as TCSP violations in particular breach both our compliance framework and the Money Laundering Regulations. You should contact Customer Support in the first instance for clarification before commencing work. Also, AAT’s website provides information on the services available under each license, as well as a description of areas of work a licensed member would expect to provide a client for the service in question.

Staying compliant and keeping abreast of AML legislation is intimidating but essential. If you need help, please reach out to AAT’s AML Helpline – [email protected] or 0207 367 1347.

Would you like to contribute to future articles like this one? If so, please get in touch with Annie Makoff-Clark at [email protected].

Annie Makoff is a freelance journalist and editor.