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Money laundering compliance?

As an accountant is it mandatory to always check bank statements?

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Dear members,

I am a practising accountant with mix of clients. I wanted some guidance regarding money laundering complaince. Sometimes I get clients who are UBER/Deliveroo drivers and they normally provide their uber statements and expense receipts. 

As it is the responsibilty of tax payer to declare all sources of income and as an accountant its not your duty to verify or audit figures provided by the client unless you can clearly figure out that the information is wrong or misleading. 

Do we as an accountant, must always check clients personal bank statements for money laundering complaince or if a client walks in gives information about their income and expenses, should that be enough? 

For safe side, I have always asked all clients who are sole traders or self employed to provide their personal bank statements just to verify that their income matches with money coming into bank account and to make sure there are no unidentified cash deposits or other transfers for money laundering complaince. Was just wondering do I need to do it? 

Replies (16)

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By Mr_awol
12th Nov 2019 18:02

If someone is self employed I encourage them to have a separate business account - mainly because they should anyway but also because it means I don't have to trawl through all the personal stuff to reconcile it, and because it allows them to keep their private life, um, private.

I wouldn't dream of telling my clients to bring their personal statements in just in case they are banking illicit income in there on the sly.

I think you're overstepping the mark, personally.

Thanks (2)
Hallerud at Easter
By DJKL
12th Nov 2019 18:08

I think I would only be getting to that stage if the figures arising from what they gave me looked very suspect given my knowledge of their lifestyle, or maybe margins looked untoward , even then I would not initially ask for personal bank statements though over time it is possible the conversation might get to that point.

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By GHarr497688
12th Nov 2019 20:38

You have no right to ask for any bank statements unless you have a suspicion on Money Laundering which is almost 100% impossible to detect in 100% of cases.
If a client lists his income and expenses on a sheet of paper why would that be suspicious ? On what grounds do you need to see bank statements ? The client signs the Accounts anyway . MLR are to do with criminal activity and knowing your client .

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By JDBENJAMIN
12th Nov 2019 23:17

It's not our job to be unpaid auditors. We only have to refuse to use a client's own unsupported figures if there are positive reasons to think they are wrong. We don't have to check them when there is merely a possibility of them being wrong.

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Replying to JDBENJAMIN:
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By darkmatter
14th Nov 2019 17:47

absolutely spot on , do the minimum the law requires , if you have suspicion thats a different matter, otherwise you will end up working long hours, no social life and with a coronary

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By Matrix
13th Nov 2019 07:23

I don’t check any source documentation including receipts but advise clients that HMRC could ask for it.

Your client is signing a statement to say the return is complete. This year there seem to be relatively few returns with bank interest (and it is holding up many others) but there are only so many times when you can say “did you have any other income, for example, bank interest”....

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By Mr_awol
13th Nov 2019 10:04

One point to add - of the clients I would flag as higher risk of suppressing income, almost all of them are in trades or industries where 'cash jobs' are possible (or perhaps even common). I'm not convinced I would gain any reassurance of their status as fine upstanding citizens by reviewing their personal bank statements.

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Replying to Mr_awol:
Hallerud at Easter
By DJKL
13th Nov 2019 12:59

Or high cash retail;, chip shops/small cafes/corner shops etc, but at least with them we can do commonsense margin analysis, unless they are also suppressing purchases. (I years ago acted in a back duty for a mobile burger van, we got a great result but HMRC before we got there did lots of work via local cash and carry outlets convinced our client was buying in more than her accounts showed)

Re fine upstanding citizens, one avenue for HMRC that may make a bit of a comeback post Brexit is HMRC asking for sight of passports to check holiday frequencies.

My initial benchmarks tend to be cars, house, kids schools and holidays- bank statements do not really help with omitted income but they do allow one to spot omitted personal purchases e.g. the family with no record of ever buying food from a supermarket etc.

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Replying to DJKL:
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By Gone Sailing
13th Nov 2019 13:30

I learnt recently that in some EU countries the cash tills are government approved - ie. no hiding there.

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Replying to Gone Sailing:
Hallerud at Easter
By DJKL
13th Nov 2019 14:25

In some countries cash tills are getting harder to find, the small Vastergotland town of Toreboda has a tool shop plus bolts/screws/consumables/ fastenings etc, they will not accept cash and have not done for a few years.

An approved till will not cure the issue if not rung through in the first place.

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By meadowsaw227
13th Nov 2019 10:35

I may be on my own here but I try not to hide behind the "you supplied the figures and I`m just filing them" statement.
I need the comfort of at least knowing the income/expenses bear some resemblance to reality and always do a life style check, more for my own peace of mind.

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Replying to meadowsaw227:
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By nodrogbir
13th Nov 2019 12:32

Thats a good idea and I commend you however its nothing to do with the MLR regulation and only as good as what the client tells you i.e I'm a painter but my wife earns £250,000 a year as a brain surgeon and my sons an airline pilot etc ...

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Replying to meadowsaw227:
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By Mr_awol
19th Nov 2019 13:04

I don't think anyone was advocating hiding behind such a statement. The OP has said they always ask for personal bank statements and have questioned whether they need to - specifically mentioning money laundering compliance in their query.

The answer is no, they don't need to, and certainly not from a ML compliance perspective.

Whether they want to take any other steps to verify the client's figures or to satisfy themselves that they haven't been misled is another matter. I might ask several questions where a client's lifestyle doesn't appear to match their income, but this is most unlikely to ever involve checking their personal bank activity. In fact if it got to the stage where I wanted to inspect the bank statements for 'hidden' income I think I'd quite possibly have ditched the client rather sooner.

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By Gone Sailing
13th Nov 2019 12:31

Comforting to hear the above views, a subject never too far away.

One wonders what value we are adding when keying their numbers into filing software. The times they are a changing methinks.

Weird though, where there is a business bank account, and clients to their own bookkeeping, how often do they need help with the bank rec - ie. they didn't record everything properly.

But if they use a personal bank account, ignorance is ...?

MTD for Income Tax not far away.

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Replying to Gone Sailing:
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By gcg007
19th Nov 2019 11:34

My client had an investigation some 15 years ago and all bank statements and credit card statements were requested by HMRC. At the meeting HMRC pulled up a file full of receipts and the inspector said 'we requested all of your bank and credit card statements.... where are the credit card statements related to these purchases.' Pointing at the numbers stamped at the bottom of each receipt. My client looked at the receipts..... frowned... and said 'I do not understand ....the number stamped on all of the receipts is my Little Chef loyalty card number!'

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By Psychic Sue
21st Nov 2019 12:32

I always ask my clients to have separate business bank accounts, which I reconcile. I never ask for their personal bank accounts. If there was something obvious regarding a suspicion of money laundering then a conversation with them would be necessary.

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