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Money being washed | AccountingWEB | Accountancy firms fined in HMRC's £2.28m clampdown on money-laundering
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Accountancy firms hit in £2.28m AML clampdown

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HMRC has handed out fines totalling £2.28m to businesses found to have breached money laundering regulations, with accountancy service providers footing £371,485 of that bill.

15th Apr 2024
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Of the 408 supervised businesses named by HMRC that were fined for breaching money laundering regulations between 1 April and 30 September 2023, a total of 105 were accountancy service providers (ASPs).

New data shows that Drake Consultancy Limited is the hardest hit ASP, with its fine totalling £14,500. Meanwhile, Oldland Consulting Limited’s penalty is for £13,500.

At the opposite end of the spectrum, the likes of Roscoe Financials Limited, Horizon Business Ltd and Nexis Solutions Limited will each pay £1,250.

In total, ASPs have been fined £371,485 of the £2.28m handed out overall.

The figures do not include anonymised or minor breaches, or breaches that fall under the previous money laundering regulations of 2007.

Lack of understanding

In almost every case, the ASPs named were found to have breached regulation 56 – failing to apply for registration at the required time.

Last year, anti-money laundering (AML) expert David Winch, the director of MLRO Support Limited, said that regulation 56 effectively means that you cannot practise as an “external accountant” unless you are either (a) supervised for AML by one of the recognised professional bodies, or (b) supervised for AML by HMRC.

Speaking to AccountingWEB about the latest figures, Rebecca Williams, founder of Eccounting Made Easy, believes part of the reason so many firms fall foul of the same regulation is that there’s a “lack of understanding when it comes to some of the services that are being provided”.

“There are a lot of bookkeepers and accountants, when they’re first starting out, who’ll look at providing what we call subcontractor services,” she said. “There are certain times when you need to apply for a practice licence and other times when you can rely on the AML position that’s been undertaken by the practice that you’re going to be working with.

“What I’ve seen is that individuals can fall foul of not understanding those rules correctly; when they should have applied for a practice licence, maybe they haven’t in those circumstances. So I know that’s been a bit of an issue over the past couple of years.”

A lot of questions

Williams noted that in terms of the services that are being provided, there’s also a risk of “not really understanding the rules around AML and when you’re required as a professional to undertake those checks”.

“I get asked a lot of questions by clients who should be AML-registered, in some form, that don’t understand the rules and things that they should be doing. I think partly why that happens is because the guidance is a little bit wordy. It’s maybe not as clear as it could be.

“I’m always striving for the professional bodies to give more guidance around when we need to do the things that we need to do but because it’s such a lengthy area I think sometimes you can misinterpret some of that information.

“The best thing that professional bodies can do there is just provide even more guidance, more webinars, more podcasts to reduce that lack of clarity.”

Understanding the rules 

Williams believes it’s 50/50 on whether firms could be doing more to familiarise themselves with the regulations or the professional bodies could be a little clearer.

“From your own standpoint, you’ve got to look at the risks associated with running an accounting practice or bookkeeping practice. So you need to take accountability to some degree to make sure that you understand.

“If you don’t understand the rules and regulations, or certain areas, that might be a bit threatening.

“Sometimes we’re all a bit petrified of professional body compliance in terms of: if we ask the question, are we therefore going to be listed and be reviewed in some format? Where does that go? Is that going to lead to further questions from the professional body?

“There’s always that wondering whether we’re giving you an offer from an AML perspective – is there something else that we should be looking at?”

More resources needed

So far as resources go, Williams noted that it was only this year that the Institute of Chartered Accountants in England and Wales (ICAEW) launched AML Bytes.

“I’ve been in this industry for going on 16 years and it’s taken them until this year to launch case studies, etc. So it illustrates that much, much more can be done,” said Williams.

“I also spend a lot of time looking at the professional body textbooks and they cover ethics very well but they don’t cover AML very well. I do think the professional bodies have a requirement and duty to give more information but in different formats.”

She used the Consultative Committee of Accountancy Bodies (CCAB) guidance on the accounting profession as a “fine example in that it’s very wordy”.

“It’s 100-and-something pages of information to read through. But if you actually look at the guidance, there aren’t that many examples of what to do in certain situations that are specific to bookkeeping and accountancy.

“I find that really interesting. I understand to some degree why that would be the case but I think going forward, there’s just more to be done.”

Replies (25)

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By Paul Crowley
15th Apr 2024 21:21

I cannot help noticing that most of this is late notification. Sounds to me like bookkeepers and part time subcontractors stretching into supplying direct to client.
There is nothing the PBs could do to stop this sort of stuff. PB members need practice certificates and to notify trading.
An agent account needs AML
These people are probably using client gateways, pretending to be the client.

But those are only a quarter
The rest?
Estate agents and letting agents is my guess

EDIT
ASP Accountants
EAB estate agents and letting
AMP Art market

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Replying to Paul Crowley:
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By johnjenkins
16th Apr 2024 10:49

Paul, although I know where you're coming from but using client gateways is not pretending to be the client. There is no rule or law that says an Accountant, with the clients permission, cannot use the clients gateway to submit their tax return rather than set up an agency.

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Replying to johnjenkins:
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By JustAnotherUser
16th Apr 2024 12:37

No rule?

Here is the first rule when you try to log in to gov gateway.... "Do not share your Government Gateway user ID and password with anyone else."

Apart from that it is terrible OpSec and nothing but unprofessional asking a customer for their personal log in details to a government website, or any website for that matter.

I see no valid excuse for this other than being a total cowboy. Please share reasons you find acceptable in the profession ?

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Replying to JustAnotherUser:
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By johnjenkins
16th Apr 2024 14:04

I don't find it acceptable. The client doesn't have to share user ID and password. Once gateway is open Accountant puts figures in, job done. Not my cup of tea but I'm 100% sure it happens.

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Replying to JustAnotherUser:
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By Dr Fauci
17th Apr 2024 20:18

Please point me to the legislation for this "rule"...

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Replying to Paul Crowley:
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By Postingcomments
16th Apr 2024 13:24

Yes, mainly fines for what amount to "admin errors". It is almost as though the AML rules were sowing the seeds for penalty farming - as opposed to preventing any actual crime. Such is the way of things these days, it seems.

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By FactChecker
15th Apr 2024 23:30

Suggestion for Rebecca Williams, founder of Eccounting Made Easy, around whom this article appears to have been written ...
... if you want the guidance (from CCAB et al) to be shorter/simpler, then try persuading the people who dream up the AMLR requirements to make *those* shorter/simpler in the first place.

If you ignore the few (deliberately) bad apples - just as they will ignore *any* regulations - then the first rule for obtaining legislative compliance across a large swathe of semi-professionals, many of whom are only part-time, is to ensure the rules are easy to understand.
Not just the procedural rules (which rapidly become a tick-box exercise anyway), but the basic 'am I included or not' type of questions which continue to exercise the experts on this forum.

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By Self-Employed and Happy
16th Apr 2024 10:44

This is not surprising and completely avoidable.

Last year we were contacted by an old colleague nearing retirement who is AAT, he was concerned because he had an AML check by AAT and in truth....did nothing.

We gave him the very basics of what ACCA say we should do, gave him risk assessment spreadsheets etc he had his inspection and they said "its one of the best we've seen", every time we know a client moves house we are all over them for new ID, AAT Inspectors didn't care about an up to date address as long as the former colleague had some form of ID.

There are so many varying levels to this crap that we apparently have to adhere to whilst we all are essentially competing for the same clients, this is why we need a centrally led AML check completely run by Government not accountants, solicitors, etc

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Replying to Self-Employed and Happy:
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By johnjenkins
16th Apr 2024 10:51

AML, like many other regulations is not needed and serves no purpose.

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Replying to johnjenkins:
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By AndrewV12
23rd Apr 2024 08:56

Like I always said, if we are to be the financial police watchdogs are we entitled to paid holidays and Police pensions and benefits.

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By Marlinman
16th Apr 2024 11:28

I'm sure the Mr Bigs of the underworld are aware of the AML regulations and have their own underworld accountants, lawyers and bankers to bypass them. Why would they risk everything by dealing with someone they don't know?

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By petestar1969
16th Apr 2024 11:55

Hmm, let me paint a scenario.

H&W business, they both draw a salary. One of them is paid on a self-employed basis to do the bookkeeping. Are they external and needing to register or not? How would they be found out if they had to register but didn't?

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Replying to petestar1969:
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By Postingcomments
16th Apr 2024 13:00

Isn't "the wife" usually said to do "marketing" for her salary?

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Replying to johnjenkins:
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By Self-Employed and Happy
16th Apr 2024 14:49

Really? Is that really appropriate on a forum which is supposed to be professional in nature?

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Replying to Self-Employed and Happy:
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By johnjenkins
16th Apr 2024 14:53

Your quite right it's not professional. I actually expected my post to be taken down. However it was the "marketing" bit that drew the worst out of me.

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Replying to johnjenkins:
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By Dr Fauci
17th Apr 2024 20:19

"Sales & Marketing" - the oldest profession the world has known:)

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Replying to Self-Employed and Happy:
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By Postingcomments
16th Apr 2024 15:09

There is always someone lurking who is hyper sensitive and pompous.

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Replying to Postingcomments:
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By Tom+Cross
17th Apr 2024 11:24

It's the 21st Century and (some) men, need to grow up.
This isn't hyper senstive, pompous, or even woke. The comment was inappropriate and (some) men need to wake up and smell the coffee.

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Replying to Tom+Cross:
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By johnjenkins
17th Apr 2024 14:31

The word "marketing" was used. For many, many years pictures and videos of half naked men and women have been used for advertisements and "marketing".
I presume you think that the "carry on films" were inappropriate? British humor and tea (perhaps a rich tea biccy) go well together. The comment was a reply to a person who in all probability thought a response of that nature wasn't inappropriate. As for the 21st century, yes things are going down the pan, perhaps too many "grown ups".

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Replying to johnjenkins:
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By Tom+Cross
17th Apr 2024 16:04

"Your quite right it's not professional. I actually expected my post to be taken down. However it was the "marketing" bit that drew the worst out of me."

Nuff said, I think.
My sensitivity originates from a daughter being 'abused' when she entered the workplace, many years ago now and having four granddaughters who I worry what their futures will be. Understandable, I would suggest, and when I need lectures on the topic, I'll ask for them.

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Replying to Tom+Cross:
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By johnjenkins
18th Apr 2024 09:19

Tom, I have 10 granddaughters and two great granddaughters with another on the way. I too worry about their future. When I ask about why they go out half dressed, I'm told "it's the fashion". Then I think back to Kings Road, mini skirts, hot pants etc. and of course the burning of the bra (perpetrated by women) so things haven't changed a great deal. I certainly wasn't giving you a lecture, just explaining why I made the comment (which has been taken down).

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Replying to johnjenkins:
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By Tom+Cross
17th Apr 2024 11:22

An apology wouldn't go amiss.
That isn't just an unfortunate comment. It's completely inappropriate.
Grow some!

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Replying to Tom+Cross:
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By johnjenkins
17th Apr 2024 14:34

I would never apologise for being a humorous Britain.
"Grow some" very inappropriate or is that alright because you posted it?

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David Winch
By David Winch
16th Apr 2024 17:13

A mistake I have made is assuming (without thinking about it!) that a member of a professional body who needs a practising certificate needs (& gets) AML supervision and a member who does not need a PC does not need AML supervision.
Of course when you think about it there are accountants who do not need a Practising Certificate who do need AML supervision under MLR 2017.
David

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By AndrewV12
23rd Apr 2024 08:59

Funny that I did not read any of the big four being fined.

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