The Anti Money Laundering (AML) regulations have been in place for ten years. A fourth directive is expected to take effect before the end of June and is causing concern among some accountants.
The latest directive includes most of the previous regulations with one significant addition. This is the creation of a new supervisory body which will be responsible for overseeing professional body supervisors.
The concerns are that many supervisors’ standards have been lax and the new overarching supervisory body has the power to strike off practitioners if they do not reach, and show evidence of, maintaining the expected standard. Once struck off, setting up again in business without supervision will be a criminal offence.
The new regulations could also mean that some accountancy bodies may relinquish their AML supervisory functions because of an increase in fees. In addition, the criminality test will apply to all senior managers of accountancy firms and senior staff will have to be approved by the supervisory authority. The aim is to ensure that anyone with a criminal conviction in a relevant area and those under investigation are not able to hold a management role.
However, despite the concerns, other accountants support the tightening of supervision, seeing this as a wake up call to the profession. For example, it is well known that some companies have given lip service to the AML regulations, using online tick box systems as a cheap and quick way to train staff. Companies should be using their relevant management policies and procedures as part of the training process which is, of course, impossible if there are no written policies in place.
There are a number of items which accounting professionals should be addressing now in order to comply with the new regulations:
- Make sure that anyone setting up in practice knows who will be supervising them because it’s a criminal offence to work without a supervisor.
- Make sure that appropriate written policies and procedures are in place. The easiest way to approach this is to work out the products and services you offer and then assess the risk opposed to them by money laundering.
- Make sure you have a system of verifying your clients and know if a person is on a sanctioned list or poses any risk for ID fraud or theft.
None of the above measures are new, having been in place for ten years. The difference is that the new overarching supervisory body’s powers are much greater and they are unlikely to have sympathy with companies who have ignored their responsibilities.