Compliance

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Guidance for the Accountancy sector 

Abstract

A new update of the “guidance to help prevent money laundering and terrorist financing if you provide audit, accountancy, tax advisory or related services”, it is release in early January in UK. 

The Guide replay and specified a series of questions to help Accountants to ensure their services are not used to further a criminal purpose. 

The article below illustrates: 

1. Key points

2. The most important recommendations

3. The Question listed

1. Key points

The guidance has been prepared to help:

• Auditor
• External accountant
• Insolvency practitioner
• Tax adviser
• Trust 
•  Company service provider 

to comply with their obligations under UK legislation to prevent, recognise and report money laundering. 

Compliance with it will ensure adherence with the relevant legislation including that related to counter terrorist financing and professional requirements. 

The legislation which includes the UK anti-money laundering regime is contained in: 

• The Proceeds of Crime Act 2002 (P.O.C.A.)
• The Terrorism Act 2000 (T.A. 2000)  
• The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 

The 2017 Regulations set out the systems and controls that businesses are obliged to possess, as well as the related offences that can be committed by businesses and key individuals within them.

The guidance does not cover any other services, guidance for which may be available from other sources. 

2. The most important recommendations

I. Businesses must introduce a system of regular independent AML reviews

Independent does not necessarily mean external, and some firms will have internal audit functions that can carry out the above work. 

To guarantee the adequacy and effectiveness of systems businesses must introduce an annual internal audit or internal/external compliance review, so any weaknesses could be systematically identified. 

II. Sole practitioners with no relevant employees are excluded from the provisions. 

The measures should be “proportionate to the size and nature of the business”.

Smaller firms will not necessarily have to arrange regular “cold” reviews. 

An objective examination of an assignment following its completion will not be required. 

III. The risk profiles 

The risk analysis should be refreshed regularly by periodic reviews, the frequency of which should reflect the AML risks faced, any business changes over time along with the business and its operating environment.  

In addition, whenever senior management sees that events have affected AML risks, the risk analysis should also be refreshed by an event-driven review. A fresh analysis may require AML procedures to be amended. 

Risks should be grouped into categories, such as

1.  client
2.  service
3. geography

IV. RBA procedures 

In order to be effective, the Risk Based Approach procedure should be easy to understand and easy to use for all staff who will need them. Sufficient flexibility should be built in to allow the procedures to identify, and adapt to, unusual situations. 

The Guide contains example and guidelines on what CDD looks likes. There are diagrams that represent an initial risk assessment and table that gives a summary of how beneficial ownership could be established for a variety of entities.

V. Report 

The Guide explain how manage a report and the cases when miss it can be excused. 

3. The question listed 

The guidance is formed as a FAQ form, the questions that have found a clarification are listed below:

• What the purpose of this guidance?
• Who is the guidance for?
• What is the legal status of this guidance?
• What is money laundering?
• What is the legal and regulatory framework?
• What are the responsibilities of senior management?
• What polices, procedures and controls are required?
• What is the role of the risk-based approach (RBA)?
• What is the role of senior management?
• How should the risk profile of the business?
• How should procedures take account of the RBA?
• What is client risk?
• What is services risk?
• What is geographic risk?
• What about other risk?
• How important the documentation?
• What is the purpose of CDD
• When should CDD be carried out?
• How should it be applied?
• Evidence gathering
• What happened if CDD can’t be applied?
• What must be reported?
• When and how should and onward report (SAR) be made?
• What is consent?
• What should happen after an onward report has been made?
• Why existing document retention policies may need to be changed?
• Where should reports be kept
• Who should be trained and who is responsible for training?
• What should be included
• When should training be completed?

March 2018

by Daniele Lupi