Further strengthening of the UK Anti-Money Laundering Regime

Over the summer, we ran a specific communications campaign with all UK members about the statutory requirement to be supervised under the Money Laundering Regulations. This requirement applies to all those who are ‘in Practice’, that is when providing bookkeeping and accounting services (i.e. other than as an employed person or on an unpaid/voluntary basis). As a part of this, we encouraged those members to whom this applies but who hitherto had not informed the IAB office of being ‘in Practice’, to apply for a Certificate to ensure that they meet the statutory requirement and indeed also the IAB’s own regulations. Our aim was to give those members this window of opportunity to comply and to avoid being liable for more severe penalties that are being increasingly applied across supervisors. For example, HMRC has fairly recently implemented a policy where any bookkeeping or accounting firm applying to it for Anti Money Laundering (AML) supervision but that previously had no supervisor, will be charged its annual fee for each year for which it was unsupervised – as far back as 2007. Overall, there was a very positive response to this campaign and I wish to thank all IAB members for their support and understanding.

This specific campaign was brought about as part of efforts coordinated by HM Treasury to increase the effectiveness of the UK’s AML regime. On behalf of the Government, HM Treasury is responsible for the UK AML supervisory regime and for preparing the country for the FATF ‘mutual evaluation’ due to take place in 2018. This is a type of international ‘inspection’, the purpose of which is to confirm that the UK is meeting its obligations in respect of fighting money laundering and terrorist financing.

If you are an IAB member in practice (MiP) you are most probably well aware of two very significant developments taken so far this year by the Government with the aim of further increasing efforts to fight money laundering and terrorist financing.

The first was the decision by the Government announced in March to create an additional ‘regulator of the regulators’ named the Office of Professional Body Anti-Money Laundering Supervision (OPBAS). The second, was the publication in June of the 2017 version of the Money Laundering Regulations (effective since 26th June).

The stated aims of OPBAS are to ensure that consistently high standards of supervision are maintained across all professional bodies that, like the IAB, are statutory AML regulators (of their members/firms). What this will inevitably mean for these bodies and their members, e.g the IAB and its Members in Practice, is that we will all be required to go further in terms of evidencing compliance with the Money Laundering Regulations and the effectiveness of our supervision. With other bodies, we have very robustly challenged the rationale for establishing OPBAS, including making direct representations to the relevant Government Minister expressing our serious concerns around the increased administrative and financial burden faced by bookkeeping and accounting professionals. OPBAS will have ‘teeth’ as regards non-compliant professional bodies – being empowered to apply  sanctions and ultimately to ‘strike off’ bodies from the list of AML supervisors. The draft OPBAS approach to ‘regulating the regulators’ can be accessed here.

We remain absolutely committed to only impose on IAB MiP members what is required as regards AML compliance, always aiming to be proportionate as to the size and type of bookkeeping and/or accounting business they operate and the potential risks posed.

Turning now to the latest Money Laundering Regulations, these have been quite extensively changed. However, most of the changes are in the detail rather than in the pre-existing requirements as they apply to bookkeepers and accounting professionals. Of these, perhaps the changes of greatest relevance relate to risk assessment and customer due diligence. The key requirements remain largely unaltered, that bookkeeping firms must have and implement an appropriate AML policy, procedures, personnel and also engage in training and conduct customer due diligence. Here then are a couple of key highlights:

  • An increased focus on the conducting of risk assessments – not just in relation to each client but for the firm as a whole – the latter as regards money laundering and terrorist financing risks the Practice itself faces e.g. in effect a type of self-assessment of how effective its own AML policy and procedures are in identifying Money Laundering and what potential risk there is that that it could be used to facilitate or legitimise financial crime.
  • The requirement to conduct customer due diligence for all clients remains (whether new ones or pre-existing). The details though have been significantly revised with, for example, the acceptability of using recognised, online verification services now acknowledged. In simple terms, the Practice again must take a risk-based approach to each client when conducting due diligence, paying particular attention to the potential need to apply Enhanced Due Diligence (for example, where the client is a foreign or UK Politically Exposed Person (PEP) or is connected to a PEP through family or as a close business associate.
  • There is now a requirement that all beneficial owners, managers and officers provide evidence of having no relevant criminal convictions to their AML supervisors.

If you are a Member in Practice, you may find the following information and links helpful in further understanding your obligations:

Leading online Risk Assessment tool (including AML training) available at no cost to IAB members in practice:

The IAB has partnered with the Anti-Money Laundering Compliance Company (AMLCC) to provide a tool to our members to help risk assess their clients. AMLCC is an online system that also aids in the compliance with the regulations and provides training for all staff members to help them become acquainted with, and stay up-to-date with any changes in the AML regulation.

To individually subscribe to use this tool would cost £197 (exc VAT) but as the IAB has already subscribed on your behalf it is included at no extra charge within your annual Practising Certificate.

For more information about the AMLCC tool and how to access it please see, https://www.iab.org.uk/pub/AMLCC_-_How_to_register.pdf

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017:

http://www.legislation.gov.uk/uksi/2017/692/made

IAB website information:

https://www.iab.org.uk/bookkeeping-as-a-business/aml-regulations/

IAB Guidance for Members in Practice (especially pages 8-14)

This can be downloaded via the following link: https://www.iab.org.uk/member/members-in-practice-section/.  As the guidance is only for IAB members you will need to login first to view this.

Draft AML guidance for the accountancy sector:

http://www.ccab.org.uk/documents/TTCCABGuidance2017regsAugdraftforpublication.pdf*

Further reading that may be of interest:

https://www.icaew.com/technical/legal-and-regulatory/money-laundering/uk-law-and-guidance/money-laundering-regulations-2017

https://www.accountingweb.co.uk/community/industry-insights/new-anti-money-laundering-regs-carry-on-regardless

* These publications are subject to updates

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