AML for Accountants
What do those in the accountancy sector need to have in place for money laundering prevention?
- AML Written Risk Assessment
- AML Policies and Procedures
- Due Diligence
- Risk Management
- AML Training & Awareness
Read on to find out more…
Compliance with the MLR and HMRC
Those in the accountancy sector are required to comply with the Money Laundering Regulations (MLR) in the UK. This includes accountants, tax advisers, bookkeepers and insolvency practitioners. Having an effective and compliant Anti Money Laundering Policy template can save time and money. Anti money laundering is an extensive compliance area and more than a standalone policy or tick box exercise.
The sector is supervised by the HMRC, who have published extensive guidance on the obligations under the UK legislation to prevent, recognise and report money laundering. This article helps to explain what policies and controls accountants and tax advisors need to having in place for AML compliance.
What is Financial Crime and Money Laundering?
Financial crime is any kind of criminal conduct that relates to money; assets, property, securities and/or financial services or markets. Those in the accountancy sector are obviously heavily involved in the financial system and as such not only have a legal obligation, but also a moral duty to prevent financial crime.
Money laundering is defined as the process or act of disguising or hiding the original ownership of money that has been obtained through criminal acts. These acts can include terrorism, corruption or fraud, the money from which is moved through legitimate businesses to make it appear ‘clean’.
Offences relating to money laundering, terrorist financing and financial crime can include fraud, misconduct, misuse of information, advising on or handling the proceeds of crime and/or the financing of terrorism.
AML Business Obligations
Under the money laundering regulations, there are a number of mandatory requirements that firms in the accountancy sector must comply with.
- Have an adequate anti money laundering policy and procedures
- Manage and monitor the firms’ compliance with the Money Laundering Regulations and Supervisory Authority rules
- Appoint a Nominated Officer and where applicable, a Money Laundering Reporting Officer (MLRO)
- Complete a written AML risk assessment (at least annually) and ensure appropriate controls and systems are in place to identify, assess and mitigate money laundering risks
- Train and support employees to recognise, understand and comply with momey laundering rules and regulations
- Carry our effective due diligence (including enhanced checks) on suppliers, clients and employees
- Keep required and appropriate records and documents related to AML controls and measures
- Document Suspicious Activity Reporting procedures
Anti Money Laundering Risk Assessment
One of the mandatory requirements set by the HMRC for those with obligations under the MLR is to complete a written AML Risk Assessment. This helps businesses to identify, mitigate and prevent financial crime within its services and activities. Risks that have been identified are rated and solutions put into place to reduce or eliminate the impact of the risk.
Such solutions can include carrying out the appropriate due diligence checks, having adequate risk assessment procedures or using a dedicated outsourcing policy.
Anti Money Laundering Policy & Controls
An Anti Money Laundering policy for accountants is the overarching document that ties all the AML controls and system together. The policy should accurately reflect what processes you carry out to identify, assess and mitigate the risks associated with money laundering and terrorist financing.
There are many useful AML Policy Templates available to purchase online. If you choose to use a template, ensure it covers all the mandatory and supporting requirements. 4-5 pages of generic AML content is not enough to document how you comply with the extensive Money Laundering Regulations and HMRC requirements!
Due Diligence for Accountants
Effective due diligence is one of the cornerstones of preventing money laundering and tax evasion. Knowing who your clients are is essential and often a legal requirement. Within the accountancy sector, there are numerous factors that pose risks from financial crime. It is your responsibility to ensure that your controls and procedures mitigate as many of those risks as possible.
Onboarding of clients with adequate due diligence means that you will know who you are dealing with. Understanding company and individual identities, locations, activities and practices gives you the upper hand. There is a wealth of information that can and should be collected from clients before you start working with them.
Customer due diligence means identifying your client, risk assessing them and their business actvities and putting mitigating actions into place where required.
Submitting Suspicious Activity Reports (SAR)
With obligations under the MLR and HMRC, you will be required to report actual or suspected incidents of suspicious activity. These reports, known as Suspicious Activity Reports (SAR), are made online via a submission to the National Crime Agency (NCA). You are required to have effective SAR procedures in place and can also use an internal SAR report template to ensure you are documenting the right information prior to submission. Keeping your own internal records also enables you to identify patterns and comply with the regulations.
Tax Evasion Policy
Another mandatory area that applies to many firms with MLR obligations is the prevention of tax evasion. Many businesses also have obligations under the Criminal Finances Act 2017 (CFA). This Act sets rules and requirements to prevent tax evasion through business services and activities.
Part 3 of the CFA ‘corporate offences of failure to prevent facilitation of tax evasion’ ties in with the above-mentioned risk assessment which should also identify risk factors for tax evasion. The controls and processes a business can put into place to help limit the risk of facilitating tax evasion are based around 6 guiding principles: –
- Risk assessment.
- Proportionality of risk-based prevention procedures.
- Top level commitment.
- Due diligence.
- Communication and training.
- Monitoring and review.
AML Templates & Checklists
Know Your Compliance Limited offers those in the accountancy sector a complete approach to money laundering compliance. Whether you are looking for a basic AML Self Assessment Checklist or would like an extensive AML Policy Template Toolkit, we can help.
We have a large number of bookkeepers and accountancy firms using both our basic AML Policy & Risk Assessment Pack and the complete AML Template & Due Diligence Toolkit. It depends on what (if anything) you already have in place. We have an AML Comparison page where you can compare the package contents.
The basic pack comes with an AML Policy, Suspicious Activity Reporting Procedures and a template to complete an AML risk assessment with examples included. These are the main 3 documents to help firms comply with the MLR and any HMRC requirements. However, areas such as due diligence on clients, generic risk management, anti-bribery and tax evasion are also supporting parts of AML and so if you do not have any policies or templates in place for these areas, our full AML Toolkit covers the AML and above named templates.
All of the documents are in a Word format and are fully customisable. We have written the policies and procedures to match the MLR, FCA and HMRC requirements. So, you would need to customise the content to the extent of removing any sections that do not apply to you or amending the pre-written objectives or processes if you do something different.