Ready, get set, BOOM: further changes to the Anti Money Laundering regulations

It’s long been accepted that anyone with a relevant criminal conviction is barred from professional membership of an accountancy body.

And whilst this legislation has helped regulate the accountancy services sector effectively, it hasn’t necessarily prevented people with criminal convictions from operating outside the licensed sector. Nor has it necessarily meant that people with serious criminal convictions have always been refused employment at senior officer levels within supervised firms.

Now, this loophole is set to be closed by the introduction of a new requirement – that any beneficial owner, officer or manager (the neatly named BOOM) needs to have undergone an approval process from a supervisory body (such as AAT). That approval is dependent upon whether or not the individual has an unspent relevant conviction. In practice, this means – if this applies to you – having a Basic DBS check.

What do these changes mean – and what do you have to do about it?

“BOOMs is a new definition,” says Adam Williamson, Head of Professional Standards at AAT. “Although the definition is limited, we’re taking it to mean people in an organisation who ultimately hold responsibility for senior decision-making in that organisation. This would include partners, directors, company secretaries, MLROs and the like.”

Why are these changes coming in? “It’s another element of the new Anti Money Laundering Regulations (AML),” Williamson says. “The specific aim is to try and ensure that there is no criminality at the controlling mind end of the supervised sectors; for these purposes that’s lawyers, accountants and estate agents.”

What the regulations state

All BOOMs in the specified areas will need to take a criminality check . “In effect, this will mean a Basic DBS check through the relevant websites.” There are different sites for England and Wales, Scotland and Northern Ireland, “although they essentially follow the same requirements.” This will include all licensed members who are supervised by AAT.

Next steps?

“They are twofold,” Williamson says. “If you are a supervised licensed member then the first step is to apply yourself. AAT licensed members who were approved prior to May 4 2018 are asked to apply for their check using a specialist third party – Due Diligence Checking Ltd (DDC). Applicants are able to contact DDC with queries, who will assist them throughout their application. Members will not need to send anything to AAT, as DDC will manage all applications and relay the relevant information to AAT.

AAT licensed members who were approved from 5 May 2018, and current applicants, are asked to apply directly with their appropriate body (Disclosure and Barring Service for England and Wales, Disclosure Scotland or AccessNI in Northern Ireland) and send the original document directly to AAT.

The second step is to know who those people are in the organisation who count as BOOMs, “and make a realistic assessment of who has specific responsibilities in response to AML activity. It’s important to recognise that at this stage, the checks are only being pursued with licensed members – they in turn will be responsible for any other BOOMs in their organisations to ensure they’ve undergone the checks as well.”

Timescales and penalties

The DBS check needs to completed immediately as the regulations came into force on 26 June. . “We will be undertaking spot checks and it will be part of our practice assurance reviews,” Williamson says. What happens if BOOMs continue to act without getting the checks done, or if it’s found that someone who should be disqualified from senior managerial positions is still practising? The answer is that penalties on conviction are imprisonment for a term not exceeding two years, or a fine, or both.

The view from OPBAS

The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) is a new regulator set up by the government to strengthen the AML supervisory regime and ensure the professional body supervisors (such as AAT) provide consistently high standards of AML supervision.

It supervises 22 regulatory bodies in the UK including AAT, ICAEW and ACCA. It’s been established as part of a wider package of reforms to strengthen the AML supervisory regime.

BOOMs: The key take-outs

• Who does the legislation apply to? BOOMs or sole practitioners who work in the following areas: auditors, insolvency practitioners, external accountants and tax advisers; independent legal professionals; estate agents; high value dealers.
• What do businesses need to ensure they do? A relevant firm must take reasonable care to ensure that no-one is appointed, or continues to act, as an officer or manager of the firm unless that person has been approved by the supervisory authority, and the supervisory authority’s approval of that person has not ceased to be valid.
• And as an individual? Similarly, an individual must not act, or continue to act, as a sole practitioner in the relevant fields unless they have been approved by the supervisory authority.
• What is a DBS check? The Disclosure and Barring Service (DBS) Disclosure Scotland and Access Northern Ireland help employers make safer recruitment decisions as well as ensuring unsuitable people from working with vulnerable groups. This replaces the Criminal Records Bureau (CRB) and Independent Safeguarding Authority (ISA).

“This is a further attempt to ensure that organisations within relevant sectors which clearly have the potential to be used for money-laundering do not have people at the top with relevant convictions,” Adam Williamson concludes. “This can only be a good step.”

AAT licensed members can find further support and guidance on Anti Money Laundering online.

AAT licensed member applicants can also find more information on the AAT website.

Mark Blayney Stuart is Business Journalist of the Year, Wales Media Awards 2017 and Former Head of Research at the Chartered Institute of Marketing.