The Steps to AML Success : A little love goes a long way

Brought to you by ICPA

Richard Simms offers a practical guide to AML compliance and risk management for accountants in practice

This blog is taken from the ICPA website. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk or email [email protected] or by phone on 0800-074-2896.

Achieving AML success is well within your reach. Simply put, it’s a mindset, an approach to how you operate your firm and a desire not to keep having to look over your shoulder. AML will protect your firm. So don’t forget:

• AML compliance is easy (though it does need some resource).

• You do the vast majority of AML compliance already, though you may not realise it.

• Record, record, record!

• AML compliance and risk management steps are useful to you firm.

The real cost of AML is time and resource. If you want to stay in practice and out of jail, it’s essential you get it right!

The essential questions are: Do you know right from wrong? Can you identify a risk? There’s no presumption of amazing legal knowledge or that you’re a police detective, just that you have a willingness not to turn a blind eye to the obvious.

When you’re considering any AML situation, there’s an imaginary person reviewing your actions and casting an independent eye over your decision making. If you’re questioning your own decision making, ask yourself what the independent person would say?

There’s also an assumption that you have an awareness of the state of the World. Would you choose to re-locate yourself and your family to any particular country? That’s a pretty good indication of a country’s state of law and general stability and hence it’s ML risk. Ask yourself what factors would influence such a decision?

The steps to AML success

Simply remember ‘WE LOVE AMLCC’!

W Write it down: AML is not the only part of our work where we find ourselves keeping notes of calls, meetings and decisions. For AML, if it’s not written down, it didn’t happen. AMLCC allows you keep your AML records online in one place.

E Educate and train: Training every member of your team is essential; why take the risk that something is missed, don’t forget you’ll be responsible for what they miss!  Training should be technical, practical and cover your processes, policies and controls.  AMLCC provides both staff and senior management videos. Evidence of watching the videos and passing a follow up test is kept within AMLCC.

L Look out for a visit: You must have an AML Supervisor who will monitor your AML compliance. Don’t forget that the Police, Trading Standards and HMRC are among other bodies that could request evidence of your AML compliance. Evidence of your compliance can be kept within AMLCC.

O Operational and organisational: AML is part of virtually everything that happens within a professional practice. The ‘stick of rock’ approach (the words run through the whole of the stick) is the simplest way to consider it. It forms part of both your firm’s ethos and how it interacts with clients. Many aspects of your existing processes and procedures will require only slight amendments to be fully AML compliant.  AMLCC provides an online compliance manual along with a text editable online policy.

V Verify and identify: You need to know who your clients are and verify that fact. Why, it must be a good thing to know who they are and where they live; and, how can you make a report to the National Crime Agency without knowing who you are reporting. AMLCC provide a document management section that will remind you when ID needs renewing.

E Evaluate risk: A risk-based approach and risk assessments for this and that; what’s it all about? What is the actual risk to you of being exposed to money laundering, that’s it! Demonstrating how you reached that conclusion is where the work comes in. A risk-based approach is less applicable to accountants and bookkeepers. Your inherent awareness of the transactions of a client prevents you from not seeing what’s in front of you. Yes, there will be clients that will require more research and more work to understand and evidence but that’s quite normal for a more unusual or complex client. AMLCC provides online risk assessments for your firm and your clients. Guidance and mitigation steps are included. Those within the firm, with AML responsibility, can authorise the reduction of risks for areas that have been mitigated.

A Allocate resources: An understanding of AML is not optional, neither is the requirement to follow its steps.  There’s no denying that there is a time and effort requirement to achieve compliance. The biggest step will be to get everything in place in the first place; once it’s done it will fall as part of your routine procedures and will place less of a burden. AMLCC is designed to bring efficiency to and effectiveness to your firm’s AML role.

M Monitor and update: AML is not set and forget. As you client’s change, your firm changes and recognised sector risks change, so must your AML approach. Your control checks will help you to refine your procedures. AMLCC keeps an audit trail of changes and previous versions of risk assessments and policies as they are updated.

L Law enforcement need to know: Reporting to the National Crime Agency is the end result of effective AML procedures. If you are asking yourself, is there a crime and are there proceeds, then it’s time to consider if a report should be made. Remember it includes suspicion and grounds for suspicion; what would someone looking over your shoulder think about what you’re faced with? AMLCC allows reports to be made from staff members to the firm’s senior management, with AML responsibility, to consider onward reporting to the National Crime Agency.

C Counter terrorist financing: Though a different goal to money launderers, many of the methods overlap. AML and CTF compliance generally overlap; please don’t forget this important area. AMLCC includes CTF compliance steps.

C Choose your clients: From discussions with accountants and bookkeepers in practice it seems that most firms have at least one client that makes them feel slightly worried about what the client is up to. Either get the client to fall in with what you want or move them on. Using AMLCC to document your AML steps will put the facts directly in front of you and make it more difficult to ignore them for any longer. Don’t forget that a report may need to considered.

• Richard Simms is Managing Director of the AMLCC