Money laundering procedures

Money laundering procedures

Didn't find your answer?

A small firm of unqualified accountants has asked me to advise them on a technical tax problem relating to one of their long-standing clients. The firm will be registering with HMRC as the supervisory authority in April. If I act now re the assignment, do I have to apply the money laundering procedures to their client?
Anon

Replies (1)

Please login or register to join the discussion.

David Winch
By David Winch
30th Dec 2007 11:39

Money laundering procedures

The unqualified accountants should have confirmed the identity of their client as they are obliged to do under MLR 2007. However if the client was an existing client in March 2004 (when the MLR 2003 came into effect) thay may not yet have got around to confirming the ID of this client (as he will have been exempt from ID confirmation as an "existing client" under MLR 2003).

That at least is the theory! In practice the unqualified accountants will not have been subject to supervision under MLR 2003 and may not have met their obligations. Indeed, even under MLR 2007 the supervision arrangements in relation to unqualified accountants are not yet in place although in all other respects the regulations are already in effect. Therefore the unqualified accountants might still be failing to meet their MLR obligations under MLR 2007.

Irrespective of what the unqualified firm may, or may not, have done, your obligations are to carry out customer due diligence (known as CDD) under MLR 2007. That means full CDD on the firm of unqualified accountants (who are apparently your clients) and satisfying yourself of the identity of the 'beneficial owner' - the client of the unqualified accountants.

This does not necessarily mean that you should initially confirm ID by way of the traditional "passport plus utility bill". An alternative would be to do electronic ID verification (e.g. from CallCredit or AML Search) on the firm of unqualified accountants and on their client and obtaining a signed engagement letter from the unqualified firm. You may, depending upon the circumstances, consider that to be sufficient initial confirmation of ID on a risk-sensitive basis. (Do not overlook the other elements of CDD however in relation to the purpose and nature of the business relationship and the ongoing monitoring while the relationship remains active.)

You are not permitted to rely upon the fact that (if it is the case) the unqualified accountants have confirmed the ID of their client since they are not a CCAB member firm. Even if they were a CCAB member firm I would not advise reliance on their procedures since you would be relying upon them to retain the relevant evidence should you be asked to produce it by your MLR supervisor. If they could not then produce it you would be deemed to be at fault.

David
www.MLROsupport.co.uk

Thanks (0)