Money Laundering - Client ID

Money Laundering - Client ID

Didn't find your answer?

I recently received a flyer for a company who will perform online ID checks for clients - they say that accountants will pass that cost onto their clients, so that it doesn't cost the accountant anything. Aside from the goodwill that would be lost amongst clients, what exactly do we need to be doing from December.

We have been doing ID checks for all new clients for several years when the regaulations came in. But I understand that we may now have to positively check existing clients.

As an aside, I for one have always found it strange that we submit information about our clients to the government using UTR & NI references, issued by the government, yet we still have to ID these same clients.

What are we supposed to be doing next and from when?

Yes, I am too lazy to look this up - but figured that this is something that will affect us all, and we may be interested in the current and future position.
Andy P

Replies (13)

Please login or register to join the discussion.

avatar
By pauljgoodman
18th Oct 2007 09:43

Political?
I have just received a call from a building society which is proposing an online client verification process for £5 a go. I was given the impression that I would have to make sure any new client was not a politically exposed person, so that in effect, I would have to use its services, or something similar, since there would be no way I could do the required checks otherwise. So what happened to proportional response or judgement?

Thanks (0)
avatar
By AnonymousUser
18th Oct 2007 09:51

Which BS please?
£5 a pop is about half of what I have seen elsewhere ... so very interested to know the source. I for one will charge this as a disbursement to clients but I do want the best value for money obviously. At £5, I think my clients would rather pay up than get their documents copied.

Thanks (0)
avatar
By AnonymousUser
18th Oct 2007 09:10

Can these companies cover all our MLR responsibilities?
What I would like to know is whether the services like the one Steve's company sells can cover everything we need to do for MLR purposes. It would be good to hear an opinion on this from someone independent of these companies. David Winch, for example.

Thanks (0)
avatar
By steveoneill
17th Oct 2007 15:01

More onerous than before
Andy

If you are lazy you could get caught out.

Firstly everyone is to be registered and monitored for compliance. If you are an external accountant and tax advisor i.e. ICAEW, ICAS, ICAI, ACCA, CIOT, IFA, AAT, ATT, CIPFA and CIMA you will continue to be monitored by your professional body, everyoneone else i.e. accountancy service providers has to register and be monitored by HMRC. Failure to do so is a criminal offence.

The 2007 Regs are more onerous than the 2003, but dependant on how much you complied before hand will dictate how much extra you will have to do this time. A few simple points for you are

1. The madatory risk assessment on all clients and being able to demonstrate the works undertaken are consumate with the risks assessed

2. Systems to identify on a risk sensitive basis Politically Exposed Persons

3. Enhanced due diligence in those circumstances that pose a higher risk of money laundering

4. On-going monitoring of clients and your relationship with them.

5. A written company policy document fopr money laundering compliance particular to your business

6. Regular training of staff for ML purposes

7. Loss of exemption for pre 1 March 2004 clients

There is more, but you should not be lazy, you should make an effort to find out. We are running a second set of seminars around the UK for ML Regulations, we offer in-house training and training and information guides, we do offer electronic client verification reporting because quite frankly it will be very hard to verify each client you have to the standard of the new Regs by paper alone. As for loss of goodwill with clients, they are actually quite used to it, the Government through National Savings and Investment do all new accounts verification electronically and the passport office does secondary electronic checks on all new applications. The one thing to remember is ALL in the accountancy sector are having to play by the same rules, it is not an optinal extra anymore.

For details of seminars and training etc visit our website www.btc-nw.co.uk

Steve O'Neill MICA (Dip. AML Compliance)
Business Tax Centre Limited

Thanks (0)
avatar
By AnonymousUser
18th Oct 2007 11:34

£5/client
The fee may be £5/client when averaged out, but you often have to pay over £1k up front.

Thanks (0)
avatar
By pauljgoodman
18th Oct 2007 12:13

What kind of checks
I believe it was the Skipton. But my point is really can we continue to use everyday paperwork such as utility bills and passports, without having to assume that all new clients are politically sensitive, or however it's phrased, and have to go to a third party database to do a check. As an aside, I'm curious to know what data these agencies have access to?

Thanks (0)
avatar
By Essex FCCA
18th Oct 2007 15:24

It's Call Credit
The company is called Call Credit which I believe is owned by Skipton B/Soc.

I use them and yes the cost is about £5 per search (min number 10 pm) and from memory there was a very nominal setting up fee. I forget the amount but I think it was circa £50.

I have found them to be very good and they will do a free demo over the phone.

(I have no connection with Call Credit other than being a client)

Thanks (0)
avatar
By caronlb
23rd Oct 2007 08:49

don't panic, but don't be complacent either
Accountants who are not under the supervision of those bodies listed in Schedule 3 of the Regs will be required to register, and subject to a criminal penalty if they don't, only once the HMRC decides to require registration. This is unlikely to be from day 1 and more likely to be some time next year.

The requirements of the 2007 Regns are more onerous in some respects but there are also less onerous aspects, eg the risk based approach - so you can target your resources where they are needed most. Enhanced due diligence applies for higher risk clients and in prescribed circumstances ( e.g. where the client is not physically present, see Reg 14) there are also simplified due diligence measures for specific clients (see Reg 13).

For standard clients you can carry out less onerous client due diligence measures (on a risk sensitive basis). The method for verifying identity is not prescribed so you are entitled to use electronic sources, hard copy or a combination of the two. The criteria set down in 5.3.38 of the JMLSG guidance notes (available from the JMLSG website www.jmlsg.org.uk) is useful for checking products against.

PEPs - yes you need to consider if the client is a PEP, but in reality for the majority of practices your chances of acting for a PEP or connected person are not very high. Note not all electronic databases check for PEPs.

If you don't want to subscribe to a product you may be able to use the ICAEW’s service (Complinet) (link http://www.icaew.com/index.cfm?route=127257). You'll also get an idea of what information resources the products check against.

You do need to ensure that you can verify the identity of all clients and demonstrate that you have done so. Although this includes your existing clients you will probably have what you need already on your files - so it is a case of reviewing & filling in the gaps, not suddenly requiring a passport and utility bill from all your existing clients. Determine what is appropriate for you and your clients. Anyone that tells you need to do something specfic is trying to sell you their product or service.

See the CCAB guidance for the accountancy sector, which is currently out for consultation, which is likely to be adopted by the supervisory authorities named in the Regs and for which Treasury approval will be sought. Further useful information is available from the ICAEW website www.icaew.com/moneylaundering.

There is no need to panic but don't be complacent. These requirements are not overly onerous, although they contain some specific differences, and for those individuals and businesses already following the CCAB guidance little will change.

Thanks (0)
By emcnicholas
23rd Oct 2007 10:29

Increased Risk of Penalties
With the new and wider 2007 Regulations covering all accountants, of whatever body or none, tax professionals also need to be aware of the increased risk of penalties for non-compliance with the money laundering obligations.

See for example HMRC imposing a penalty on a money forwarder under the current regulations in :-
Ali Neekooi v HMRC, Trib, E1059, 31st July

Eamon Mc Nicholas
Tax Barrister

www.EamonMcNicholas.com

Thanks (0)
David Winch
By David Winch
24th Oct 2007 13:26

What I really think!

What I really think is that the 2007 Regulations will mean that those who currently comply with the 2003 Regulations will have to review their procedures and adapt them to meet the new requirements. It should not be too difficult to do that, but it does have to be done.

Those who are not currently complying with the 2003 Regulations are at greater risk of being found out as a result of the monitoring arrangements being introduced.

In practice I think it will be sensible to have an arrangement to get electronic checks in place at a small cost per client.

Of course there are penalties for non-compliance, but actually I don't see those penalties as the serious danger. What I see as the serious dangers are:-

(i) the loss of time in having to put things right if you are found not to be complying, and

(ii) the aggravation if it turns out that one of your clients has been engaged in criminal activities (and I am not here principally thinking of tax evasion) and you should have spotted something funny but didn't.

I come across accountants in this situation (and I help them out, for a fee) but it ain't pretty!

David
www.MLROsupport.co.uk

Thanks (0)
avatar
By Robert Hurn
24th Oct 2007 15:16

Is Old client ID needed by 15 December?
I am currently contacting all clients that were with us prior to the 2003 regulations (all since have undergone ID checks). Do I need to complete the ID on all "old" clients by 15 December or before i next act for them after 15 December? Fortunately our clients are cooperating well with the ID requirement but just wondering what happend to any stragglers when the new regieme kicks in

Thank you for any guidance you can give

Thanks (0)
avatar
By caronlb
25th Oct 2007 08:31

the ICAEW's advice
This is taken from the ICAEW's website-

"Existing clients will usually be well known to the firm, so limited additional evidence of their identity will be required - like a copy of their tax return, or bank correspondence, which are likely to already be on the file. This requirement does not mean that you must immediately request identification information from all your well established clients. We recommend that during the course of the next engagement for the client, you review the information you hold to verify the client’s identity and any additional information necessary, to meet with client due diligence procedures, is requested".

There is no defined requirement to obtain passport and utility bills from existing clients. Any further evidence you require can be obtained when you next undertake an engagement for the client but if you have already started to review and fill in the gaps now that will avoid the additional burden come the tax rush in January.

Thanks (0)
avatar
By Robert Hurn
25th Oct 2007 10:56

Thank You Caron
For taking the time to reply. Generally I am in favour of the ID requirements afterall it is surely good business practice to be sure who we are acting for and where they live. I agree with your suggestion that it is best to get as many as possible done now to avoid problems in the busy period approaching.

Thank you once again

Thanks (0)