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Imprudent Accountant: Do you report criminal activity?

18th Apr 2019
Partner An unnamed firm
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As the supervisors are pulled up over their slack AML enforcement, The Imprudent Accountant deliberates how serious accountants take these matters.

In my last column, I highlighted a recent story about tax evasion, involving an individual trading in legitimate invoices. The idea was that purchasers could use these to reduce their VAT and corporation tax/income tax liabilities.

As expected, there was a wide variety of responses from accountants up and down the land, most sceptical and a couple suggesting that this was an April Fools’ Day joke. It wasn’t. At least, if it was then the BBC had chosen to broadcast their April Fools’ Day piece a couple of days ahead of everyone else.

What worries me is that nobody picked up on some serious points beneath the relative frivolity. If any of us has a suspicion that a client or any other associate with whom we come into contact has committed a crime, is laundering money or may be doing so then we have an obligation to notify the authorities.

Coincidentally, just after that article was published, AccountingWEB highlighted a report from the newly instituted Office of Professional Body Anti Money Laundering Supervision (OPBAS).

Predictably, at least in my eyes, this body with a mouthful of a title slammed the profession on the basis that nobody is taking their pet subject seriously.

That fits in with my own experience. I would love to know whether any reader has ever reported a client, or for that matter anybody else, to the authorities because they suspected them of benefiting from the proceeds of crime under the Proceeds of Crime Act 2002, the Serious Crime Act 2015 or of laundering money, which is now largely governed by The Money Laundering Regulations 2007 and the fearsomely entitled The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

My experience covers time at a couple of top 10 firms since the rules were introduced but I have not been aware of a single case in which a report was made.

There could be a number of reasons for this. First, very justifiably, there is supposed to be confidentiality surrounding any such reports. Secondly, MLROs tend to be good at weeding out situations that look dodgy but do not justify a report. Thirdly, it’s always possible that every single one of our clients were compliant, though beggar’s belief.

I certainly raised queries about two or three situations but, in each case, was comforted by someone in authority. They either confirmed that my suspicions were not strong enough to make a report, proposed keeping a watching brief without taking any further action or, as far as I recall in one case, suggested that it was actually down to the firm of solicitors who had commissioned my services to make the report.

Personally, I doubt that more than a handful of smaller firms have ever reported in such situations, preferring to keep their clients happy or just being too dilatory to actually take the necessary action.

Until the ICAEW and its peers start taking these matters seriously, carrying out audits on professional practices and issuing penalties together with naming and shaming publication details or perhaps even expelling those that commit offences repeatedly, I fear that this is legislation that will be ignored wherever possible.

I would love even one reader to come back with a strong refutation of these assumptions, at the very least confirming that they have made multiple reports of their own clients or those of others. Rightly, I have very low expectations. Surprise me!

Replies (11)

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By stepurhan
18th Apr 2019 16:43

I am aware of reports made at a previous firm. I'm sure the fact that the clients in question had also annoyed the MLRO in some way was not a factor in determining that reports were required.

But those reports were definitely the exception rather than the rule.

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Tax Manager
By Dynamo1224
18th Apr 2019 17:16

I've seen reports made at current and previous firms.

Some MLRO's have needed to take their role more seriously but most understood the importance of their responsibilities.

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Della Hudson FCA
By Della Hudson
20th Apr 2019 09:51

I made just 2 reports throughout the years of running my own practice. Neither was a client because, if we spotted any problems with our own clients, they understood the need to correct it and allowed us to do so.

Perhaps we were lucky or perhaps it was our client selection process.

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Replying to HudsonCo:
By SXGuy
20th Apr 2019 18:15

I think you've hit the nail on the head there.

If you spot something wrong and the client can correct it before it gets to serious, you wouldn't report them for it.

I think the op is delusional personally to think that everyone must be at it in some way and we're all ignoring it.

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Red Leader
By Red Leader
23rd Apr 2019 12:02


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Replying to Red Leader:
By stepurhan
23rd Apr 2019 13:36

The first rule of Omerta is that you don't talk about Omerta.

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Replying to stepurhan:
Red Leader
By Red Leader
23rd Apr 2019 14:37

The second rule is you don't disrespect a made man.

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Replying to Red Leader:
By itp3e
26th Apr 2019 12:02

Ouee' ' paesaa' !

Wise Guy !!!

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Replying to itp3e:
By hernardo
24th Aug 2020 13:16

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David Winch
By David Winch
26th Apr 2019 10:09

In one of your examples you say your work was commissioned by a solicitor. Depending upon the situation your suspicion could have fallen within PoCA privilege under s330 in which case no report should be made.
But I take your point that in the profession as a whole compliance may be patchy.

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By annemanike
30th Jun 2019 13:14

I certainly raised queries about two or three situations but, in each case, was comforted by someone in authority.


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