The recent prosecution of NatWest in connection with money laundering offences should act as a wake up call to the more dilatory accountants - which is most of us.
NatWest's compliance failures
The bank has landed itself with fines and costs of just shy of £270m as a result of its failure to implement rigorous money laundering standards that are expected of competent professionals.
Astonishingly, this fine relates to the bank’s activities on a single client and the story beggar’s belief.
Apparently the client, a Bradford-based jeweller with a budgeted turnover of around £15m, deposited almost 25 times that amount over a five-year period, including £264m in cash, some of it in black plastic bin bags.
This wasn't merely a case of a single branch failing to apply the law correctly, the cash payments were deposited up and down the country, although Southall took pride of place at £42m in metal over a year from January 2015.
Alarm bells
We should all look aghast at behaviour on behalf of the bank that quite frankly looks criminal.
If any accountant received a request from a client to deposit even £1,000 in cash or pay a fee in that manner, you have to think that alarm bells would start ringing.
At those levels there might be very reasonable explanations, but once you get up into the millions, anyone employed in the financial services industry should be panicking.
The less polite might initially laugh at NatWest’s great inadequacies and then might start wondering why no employee has found themselves heading for jail.
Has complancency set in?
It might then be time to wonder whether complacency could be setting in at your own practices.
When money laundering originally hit the scene, most firms went overboard in appointing designated individuals, training staff and generally imposing what sounded like comprehensive if tedious regulations to root out potential lawbreaking but also cover the firm’s collective back.
Years later it is all too easy to pay lip service to the money laundering regulations without taking them as seriously as we might. After all, the amount of effort involved in making lengthy reports and filing them with the authorities is something that most of us would very reasonably prefer to avoid wherever possible.
To take a simple example, this accountant has had a number of very serious conversations over the years with firms’ money-laundering officers without ever being asked to complete a formal report. That may be a reflection of the care with which he chooses his clients, good luck or a colleague taking a flyer at the margins of acceptable behaviour.
The general statistics for reports of money laundering suggest that this is representative of the professions as a whole.
Look at your internal operations
Suspicious activity goes on all of the time and very rarely seems to be reported, which means that those who are indulging in criminal behaviour are probably getting away with it far more often than they should.
To compound the problem, we have all had so many problems over the last couple of years that money laundering might very well have fallen way down the list of super urgent issues that need to be addressed.
If your office is closed for months at a time, staff are falling sick on a regular basis, clients cannot be seen in person and some of them have gone bust, while recruitment of key staff is nigh on impossible, there is an awful lot on every one of our plates.
Even so, this horrific story should spur accountants on to take a good look at their internal regulations and operations when it comes to prospective financial crime. If nothing else, perhaps this is the moment to send all staff a reminder of their obligations and ensure that your practice does not follow NatWest into the courts, or at the very least the disciplinary panels of professional bodies.