Share
Twitter
Facebook
LinkedIn
WhatsApp
Mail
Copy linkWhat is Anti-Money Laundering (AML) and how does it impact accountants?
There's no doubt: Anti-Money Laundering (AML) must be a high priority for accountants.
Although there are no exact figures, there is a realistic possibility that the scale of money laundering impacting the UK annually is hundreds of billions of pounds.
The pressure is on to understand and implement effective AML measures to protect clients, businesses and the UK's financial system.
So, as a busy practice keen to cross AML off your to-do list, where do you begin?
Anti-Money Laundering (AML) and its impact on accountants
Anti-Money Laundering (AML) refers to a set of regulations, policies and procedures designed to prevent and detect money laundering.
The primary objective of AML measures is to ensure entities don’t inadvertently participate in criminal money laundering activities.
In regards to AML for accountants, in the UK, AML best practice is defined and led by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), housed within the Financial Conduct Authority.
OPBAS supervises the 25 industry regulators across the legal and accounting sectors, making sure these regulators are monitoring AML compliance amongst their members.
Who needs an Anti-Money Laundering policy?
Anti-Money Laundering measures are crucial to upholding UK financial regulation, impacting the majority of financial services, including:
- Accountants
- Tax advisers
- Auditors
- Insolvency practitioners
- Independent legal professionals
- Trust and company service providers
- Estate and letting agencies.
To see the full list of financial services that need to take Anti-Money Laundering actions, head over to the AML page on HMRC.
How can accountants ensure Anti-Money Laundering compliance?
As an accountancy practice, the first step to becoming AML compliant is to register with a supervisor who regulates your industry sector.
These industry regulators – sometimes referred to as professional body supervisors or PBSs – monitor and enforce AML measures among their members.
For accountants, relevant regulators include:
- Association of Chartered Certified Accountants (ACCA)
- Association of Accounting Technicians (AAT)
- Association of International Accountants (AIA)
- Chartered Institute of Management Accountants (CIMA)
- Institute of Chartered Accountants in England and Wales (ICAEW)
- Institute of Chartered Accountants in Ireland (ICAI)
- Institute of Chartered Accountants of Scotland (ICAS)
- Institute of Financial Accountants (IFA)
In some cases, you may need to register with HMRC directly.
Anti-Money Laundering checklist for accountants
As well as registering with the necessary regulatory body, firms still need to put in the work to fulfil their AML obligations.
Here are some of the things you’ll need to consider and action to maintain AML compliance:
- Customer Due Diligence (CDD) – you’re required to verify the identity of your customers and that of their business relationships, plus keep an eye on the nature of their transactions
- Know Your Customer (KYC) – as part of your Customer Due Diligence, you’ll need to gather information about customers to assess their risk profile
- Transaction Monitoring – to fulfil this requirement, you’ll monitor transactions for unusual patterns or behaviours, such as unexplained transactions
- Suspicious Activity Reporting (SAR) – you’ll need to have processes in place to file a report with the relevant authorities if you identify possible money laundering activity
- Record-Keeping – AML regulations require you to maintain detailed records of customer transactions, plus the steps you’ve taken as part of your due diligence protocols
- Training and Internal Controls – firms are responsible for ensuring their staff are fully trained to recognise and address AML issues
- International Cooperation – money laundering often involves cross-border transactions, and as such, you’re encouraged to share relevant information between international financial institutions and law enforcement
Simply put, there's an enormous amount to consider.
Note: there is AML compliance software out there which can make this level of compliance far simpler.
What happens if accountants aren’t Anti-Money Laundering compliant?
Letting your AML responsibilities slip can have drastic consequences.
Doing nothing is no longer an option, especially since HMRC has begun issuing fines to firms that fail to demonstrate AML compliance.
Accountants have also been excluded from their bodies for lying about their AML policies.
In their 2022/23 report, the Office for Professional Body Anti-Money Laundering called for regulators to step up their efforts in upholding AML measures.
AML software for accountants
While adhering to every aspect of AML is a hefty responsibility for busy accountants, help is at hand.
AML software is a great way to effectively fulfil your obligations in less time and with greater efficiency.
Our software, IRIS Elements AML, is designed specifically for accountants, allowing you to streamline compliance and identify risks with ease.
Some of IRIS Elements AML’s stand-out features and benefits include:
- Access a dedicated AML dashboard, allowing you to easily log and monitor AML activity
- Generate Suspicious Activity Reports (SAR) via an intuitive form with comprehensive “drop-down” options
- Using AML KYC software, you can ensure you’re completing all essential Know Your Client actions with a customisable checklist
- Create and share templates for efficient firm-wide risk assessment and compliance
- Run comprehensive AML checks in the background while you work with AML checks software
Like to learn more about anti-money laundering? Read our comprehensive Anti-Money Laundering guide for accountants or check out some of the software solutions IRIS provides to make AML accounting compliance simple and straightforward.
