Basic DBS checks: do you know what you need to know?

AAT licensed members who are supervised by AAT for Anti Money Laundering will soon be receiving letters explaining new government regulations requiring extra DBS checks.

How the process will work

New rules are coming into force which will require AAT licensed members to apply for a Basic DBS check and receive a Basic Disclosure Certificate in order to continue practising. The deadline for compliance is now less than two months away.

Supervised licensed members will need to have their checks completed by June 26, when the new rules come into force. Communications will be sent from the beginning of May and the last batch of AAT licensed members to be contacted will have just over a month to complete the paperwork.

AAT members will be asked to apply for their check through Due Diligence Checking (DDC), a registered third party company which AAT has partnered with in order to streamline the process.

What are the new rules?

If you are an AAT supervised licensed member then you will need to supply basic information and proof of identity documents to enable DDC to apply for your DBS check on your behalf.  The check will ensure that you don’t have an unspent criminal conviction which could compromise your ability to practise under the new rules.

These checks relate to Schedule 3 of the 2017 Money Laundering Regulations (MLR 2017).

Currently, anyone with a relevant criminal conviction is likely to be barred from professional membership of an accountancy body through their fit and proper tests. This helps to regulate the accountancy services sector.

However, this does not stop people with criminal convictions operating outside of the professional sector. It means that people with serious criminal convictions might still be able to work at a senior officer level within supervised firms.

Therefore, the new MLR 2017 introduced an additional requirement for any beneficial owner, officer or manager (BOOM) to have an extra check and approval process from a supervisory body.

Only those without a relevant criminal conviction will be allowed to continue practising.

HM Treasury have now, after months of discussion, confirmed that this approval process must be based on Basic DBS checks being undertaken and that the regulations will come into force on June 26 2018.

How will the process work?

In order to ensure compliance, AAT will be requiring supervised licensed members to work with a third party partner who will undertake the DBS checks on their behalf and report the results back to AAT.

The organisation that AAT has partnered with is Due Diligence Checking Ltd (DDC). It is a registered body for the Disclosure and Barring Service, Disclosure Scotland and Access Northern Ireland. It offers DBS checks (Disclosures) for organisations and employers using a secure online application system.

DCC’s clients include Government, education and healthcare sectors, voluntary organisations and businesses of all sizes.

What information will I need to provide?

A DBS check will require you to give details of your current and previous address and provide original documents to confirm your identity.

In December 2012 the Criminal Records Bureau (CRB) and the Independent Safeguarding Authority (ISA) merged to become the Disclosure and Barring Service (DBS). The CRB Check is now referred to as the DBS check.

DDC will be contacting members from the beginning of May with information about how the process will work, what documents are required, and how to log on to the secure website.

Why is AAT using a third party?

Adam Williamson, Head of Professional Standards at AAT explains: “The new MLR 2017 updated last year stipulated that any beneficial owner or manager would not be able to operate if they had a relevant criminal conviction. In our case, AAT supervising licenced members are in this position.

“We have been negotiating with HM Treasury for some time to define what the legislation meant. We looked at self-declaration but HMT said that would not be sufficient. They decided that it would require a DBS check to be submitted to the relevant supervisory body.

“To ensure a smooth and efficient process for our members, we decided to partner with a third party which specialises in this area and is a registered body that can handle mass DBS applications.”

What should I expect?

AAT licensed members will receive communications from AAT, which will be followed by an email from DDC.  This will explain  how they can log onto the website, make their application, and how to submit original copies of their identity details. Applicants will be 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.

How much will it cost?

The cost is £46.50 per member in England, Wales and Scotland, and £47.50 in Northern Ireland. This covers both the charge set by DBS, Disclosure Scotland and Access Northern Ireland as well as the DDC administration fee.

“Normally the DBS check lasts for one year but members won’t need to renew annually,” Williamson explained. “Regulations only require it to be a one-off, so existing members won’t have to renew each year. New applicants to AAT will still have to go through the process when they first join.”

What is a relevant conviction?

DDC will alert AAT to anyone with an outstanding conviction.

Williamson explained that SP30s and other motoring offences are not considered to be an issue.

“Our main concern is around serious convictions such as fraud,” he says.

County Court Judgements (CCJs) and Debt Relief Orders (DROs) do not come up on DBS checks.

“We have our own policies around DROs and CCJs,” he says. “When people apply or file their annual return they are required to tell us about that as a matter of course but it is unlikely to cause serious problems.

“We would be more concerned about insolvencies and serious criminal convictions where [there] might be danger of harm or abuse of position. That is what we are most strict on.”

If the DBS check uncovered a criminal conviction for fraud then it is likely that the BOOM would have their licence removed and they would no longer be able to practise as a supervisor.”

“It is likely that we would also remove membership completely,” he said. “According to regulations, at that point they would no longer be legally allowed to operate in position of BOOM in [an] accredited firm.”

He points out that this is a significant change. In the past, whilst a professional body might have prevented them being a member, someone with a fraud conviction could still have operated outside a regulated body. Now that is no longer the case.

Why did AAT choose DDC?

“We looked at different companies that offered these services and compared their services and charges and DDC offered the best value for money on behalf of members,” Williamson says.

“The approach we have taken is in common with other supervisory bodies. The regulations came in a year ago and we have been trying to work with HMT to clarify what this means in practice. “It has been a frustration for ourselves and our members that this has led to such a short time frame to get this done.”

Why you should take this seriously

The MLR 2017 came into force on 26 June 2017. It is important for firms to take the new regulations seriously. New research conducted by ID verification provider, Credas, reveals that a significant number of businesses may be in danger of breaching Anti Money Laundering (AML) legislation.

Rhys David, CEO of Credas, said: “Anti Money Laundering checks are becoming much more stringent, and now is really the time to streamline processes and make sure everything is in order before investigations take place. Weak processes and undertrained staff can leave the door open for criminals.”

Evan Wright, partner in the Corporate and Professional Regulation team at JMW, said that from 26 June it would be a criminal offence if someone were to act as a BOOM without approval.

“It means that ownership and management of firms becomes more transparent,” he said. “It is an extra burden that is now placed on the firm.”

Along with a package of other AML regulations, it should in future be easier to expose questionable transactions within firms, he said.

“Whether or not the regulations will have an effect will depend on the degree to which they are enforced, and whether the rules governing failure to obtain authorisation actually have teeth,” he said.

Michael Harris, Director of Financial Crime and Compliance at LexisNexis Risk Solutions, said the new Money Laundering rules had come about because the UK government had been looking at financial crime. The UK was a major financial centre and as a member of the G7 and part of the EU it was obliged to follow the guidance for EU countries.

He said that in practice the MLR 2017 would, on a wider scale, require all firms that were involved in financial transactions to do proper due diligence on clients.

“It is an environment which is becoming more demanding in terms of checks,” he said. “Even after Brexit we will be seen at the forefront of this. The UK is still viewed as a leader in this area.”

DDC will be contacting members from the beginning of May with information about how the process will work, what documents are required, and how to log on to the secure website.

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

Marianne Curphey is an award-winning financial writer and columnist, and author of the book How Money Works. She worked as City Editor at The Guardian, deputy editor of Guardian online, and has worked for The Times, Telegraph and BBC.

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