Accountants at the front line of AML fight
Donald Toon, director of economic and cybercrime at the National Crime Agency, believes accounting firms can play a huge role in stopping the flow of illicit money running through the UK.
It is undeniable that progress has been made in the fight against financial crime in the time since the first National Risk Assessment (NRA) was published by HM Government in 2015.
The introduction of the new Money Laundering Regulations 2017 and the Criminal Finances Act 2017, as well as increased information sharing efforts with and by professional body supervisors, have improved the supervisory regime and created a more collaborative relationship between law enforcement and accountancy bodies.
Added to this, the Office for Professional Body Anti Money Laundering Supervision (OPBAS) will create additional safeguards and help professional body supervisors to tackle criminal activity more effectively.
However, the release of the latest NRA at the end of 2017 shows us that there’s plenty more work to be done.
Professional criminals are becoming more sophisticated. Illicit financial flows are reaching all corners of the UK’s complex financial system, making reporting by accounting and finance professionals in the small and medium-sized enterprises (SME) space crucial if we are to address the full threat.
The use of accountancy services to provide a veneer of legitimacy to falsified accounts or documents used to conceal the source of funds is a serious issue facing the industry. The involvement of accountants in company formation and other company services, in both the UK and abroad, is just one example of potential money laundering risk.
Of particular concern to law enforcement are the low volumes of reported suspicions within the accounting sector. Accountants and tax advisers raise just over 1% of Suspicious Activity Reports (SARs). Accounting professionals may not have access to as much transactional information as the banks – however, there is room for improvement, especially among smaller firms operating in high risk areas.
With this in mind – and considering the fact that the social and economic cost of serious crime to the UK, according to the 2013 Serious and Organised Crime Survey, is more than £24bn a year – it is vitally important that accountancy firms, particularly in the SME space, fully engage with the reporting process.
It should be remembered that there is no such thing as a ‘wasted SAR’. SARs are critical pieces of the intelligence jigsaw, which not only help to tackle the scourge of money laundering itself, but are often the starting point for uncovering underlying criminality behind the laundered money. SARs submitted by accountants have supported successful prosecutions of criminals.
Far from being a victimless crime, even unwitting involvement in money laundering can ruin the reputations of unsuspecting accountancy and other professional businesses, distort the labour market and skew property prices. It also undermines confidence in the UK as a financial centre and deprives the treasury of taxation that would be used for vital public services.
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On a societal level, money laundering funds both the drug trade and terrorist activities, as well as allowing criminals who commit crimes such as human trafficking and modern slavery to profit.
It has been estimated that more than £90bn worth of illicit funds could be being laundered through the UK financial system each year. As key players on the frontline of the fight against financial crime, accountants and associated professions, particularly those operating in the SME sector, have a crucial role to play in stopping this.
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Director of Economic and Cyber Crime at the National Crime Agency (NCA) - Donald started his career in law enforcement in 1990 joining the then HM Customs & Excise and has worked in criminal investigation, enforcement policy and operational management for more than 20 years. He was HMRC’s Criminal Investigation Director from 2011.