Accountants at the front line of AML fight

Man is holding Anti money laundering sign
Donald Toon
Director of Economic and Cyber Crime
National Crime Agency
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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.

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. 

About Donald Toon

Donald Toon

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.


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15th Feb 2018 13:49

Donald, the trouble with all of this is we spend hours and hours on end getting fairly pointless ID which any proper criminal would be able to fake anyhow.

All you have succeeded in doing is create just another 'tick box' culture with a large burden of admin with few results on the ground.

This puts accountants on the back foot to start with. We don't really care about it, and why should we? Nor do estate agents, lawyers, or anyone else. Its just another thing to get through before we can do our job, bare minimum compliance, barem minimum thought.

We are compelled by draconian legislation to submit SAR's, but in practice not one of the ones I have put in has resulted in any action on the part of HMRC. You could have collected at least £20k from ones I have put in if you muppets had bothered to take some action. After which point I can assure you I really cant be bothered any more, and I am happy to keep my eyes pretty closed unless there is something so big and so obvious I am compelled by fear of a prison term for not putting one in.

Remember accountants DONT GET PAID to deal with all of this. Even your standard police informant gets a few £20's for being a garss. We get nothing, but cost.

If you want more SAR's then you need more carrot, less stick, and you need to actually act on them, and been seen to be acting on them.

Thanks (6)
to ireallyshouldknowthisbut
16th Feb 2018 12:16

An accountant submitted an SAR for us and I have been wondering if it will be taken up.

I take from what you say that this is unlikely.

Thank you for your comment.

Thanks (0)
15th Feb 2018 16:02

I agree with the reply 110% - no, actually 120%
This MLR b*llocks is a complete and utter waste of time.

Thanks (5)
15th Feb 2018 19:33

Have to agree with the other responses. I've made a number of SARs re tax evasion, but they've been completely ignored by HMRC, even when I've handed them the information on a plate, with full details of identity, tax references, dates of transactions, etc. One case alone was tax evasion of around £10k in just a single year. If HMRC can't be bothered to act on that kind of information, I can't be bothered to tell them anymore. Like others, I'll keep my eyes and ears closed in the future!

Thanks (4)
By chatman
16th Feb 2018 13:44

I agree with the previous respondents. The AML system is a load of bollox. It is not used to catch criminals but can be used to persecute those whose only crime is a failure to comply with the burdensome AML admin itself.

When we hear about such things as HSBC being allowed to launder Mexican drug cartel money and its head of compliance at the time being subsequently appointed Chair of the BBC Trust, we tend to view articles like this as drivel.

Thanks (2)
By Locutus
17th Feb 2018 10:14

I would echo what everyone else has said.

In the middle of 2015 I became aware of a fraud in which the fraudster impersonated my firm, to add fake audit reports to accounts. This enabled them to obtain credit from suppliers, receive the goods and then disappear. When I looked into it, I found around 30 linked companies, that I knew of. There were probably dozens of others that I didn’t.

Based upon the county court judgements these companies received, I would estimate the loss to victims be at least £750k.

I probably made around half a dozen SARs over the course of a year. But heard nothing further. The Insolvency Service eventually wound most of them up.

However, a couple of them still survive to this day. One even recently filed what appear to be false unaudited accounts.

Apparently us accountants don’t file enough SARs, but what’s the point, when it appears that the National Crime Agency and other agencies can’t deal with the number they already receive?

Thanks (0)
19th Feb 2018 09:53

I would be keen to see the stats on this but I would imagine that the AML regulations have prosecuted more Solicitors, Accountants and Estate Agents for getting it wrong or making mistakes then they have caught terrorists and drug cartels.

I now understand that Bitcoin is the currency of criminality, yet it is totally unregulated, you couldn't make it up.

Front line is where resources are needed to get on top of this not forcing further regulation on us.

Thanks (1)