Here are the essential things you need to know to fight money-laundering.
The tricks of money-laundering crime rings are constantly evolving and becoming ever-harder to spot, as the 2017 National Risk Assessment made plain. It is also increasingly likely that professional services, such as accountancy, could provide a gateway for criminals to disguise the origins of their funds.
So accountants need to be vigilant and effective in their efforts to fight money laundering. They also need to stay up-to-date with criminal tactics and professional obligations.
Here are the requirements of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).
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If you are an AAT licensed member who is supervised by AAT for AML, your firm must respond to our AML survey by Friday 6 December. Click below to find out more:
Procedures, policies and controls
Does your firm have written policies, procedures and controls in place to combat money laundering? These can be proportionate to the size and nature of the business, but they need to be clear, written down and well-understood. Appropriate policies and procedures include:
- Client due diligence
- Clear communication of policies and procedures
- Internal checks and controls
- Risk management practices
- Compliance monitoring
Client due diligence
Is your firm doing appropriate risk assessments on clients? Controls must be in place to ensure due diligence is undertaken before services are provided to a client. There must also be processes set up to identify and respond to any changes later in your relationship that might present a risk. It’s important that you keep a written record of all client risk assessments, and revisit them regularly – particularly those with which you’ve identified an element of risk, but not enough to terminate the relationship.
A whole-firm risk assessment
MLR 2017 requires accountants to undertake a regular, firm-wide risk assessment of activities. This should happen at least every year. A firm-wide risk assessment should consider:
- Your clients
- The country in which you operate
- The services you offer
- Delivery channels
You are required by law to keep a written record of your risk assessment and review it frequently. AAT licensed accountants will be expected to supply a copy of their risk assessment as part of their annual practice performance review.
Awareness, training and CPD
Are employees kept up to date with the necessary skills and knowledge to carry out their responsibilities? Every employee who deals with customers or transactions in any way needs to understand the firm’s policies, controls and procedures. They need to understand the legal requirements, the risk of money laundering, checks they should make, and how to report suspicious activities.
Records should be kept of relationships with clients. Does your firm keep anti-money laundering records for at least five years after a business relationship with a client concludes? Record-keeping is a constant theme in anti-money laundering compliance. When policies and plans are reviewed, a note should be made – even if nothing is altered.
It is important that your firm not only has its own supervision standards, but that it is meeting them. There are also regulatory requirements such as carrying out a criminality check on all beneficial owners, officers or managers. These are required for AAT supervision of anti-money laundering compliance.
Suspicious activity reporting
Your firm must have specific internal reporting procedures for when a member of staff knows or suspects (or has reasonable grounds to know or suspect) a person is engaged in money laundering or terrorist financing. Does the procedure include other factors such as timescales and tipping off? The annual review is also an opportunity for the money laundering reporting officer to carry out a review of any internal suspicious activity reports and how this impacts the risk management of the firm.
It’s important you carry out regular reviews and updates on your AML procedures. The money laundering reporting officer and senior management should monitor the effectiveness of the review so that improvements can be made when inefficiencies are found. A firm should always compliment the annual review with regular meetings, too.
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David Nunn is Content Manager at AAT.