AML and compliance mistakes to avoid

AML failures

A member firm was found non-compliant with the Money Laundering Regulations 2017 (MLR 2017). Significant weaknesses included:

• Inadequate AML policies and procedures
• Lack of effective AML training
• Poor client due diligence (CDD)
  • Failure to conduct appropriate checks for new clients
  • Failure to maintain ongoing monitoring for existing clients
  • Inadequate documentation of due diligence.

Clients’ money breaches

A licensed member breached the Clients’ Money Policy, insufficiently safeguarding client money:

• Failing to verify client identity before handling funds
• Not obtaining formal bank confirmation of the trust status of a client account.

Unauthorised provision of services

A licensed bookkeeper carried out work beyond their authorisation, breaching regulations and fundamental ethical principles such as professional competence and due care, and integrity. Activities included:

• Statutory accounts preparation
• Tax services such as Business Income Tax and Capital Gains Tax
• Assurance-related work.

Professional conduct failures

A member failed to declare dividend income from their personal shareholding, despite their own firm acting as agent for HMRC submissions.

This represented a conflict between personal and professional responsibilities, and a failure to meet expected standards of accuracy, integrity and competence.

Criminal conviction

A member was convicted of driving while over the legal alcohol limit.

Regulatory breaches

A member operated in public practice for approximately 24 months without:

• Holding a valid practising licence
• Being supervised by an appropriate AML supervisory authority.