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Accountant fined almost £15k for withholding AML evidence

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An ‘overwhelmed’ sole practitioner has been hit with a combined financial penalty and costs of £23,840 after another case of insufficient anti-money laundering compliance leading to tough disciplinary action.

24th Apr 2023
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Malcolm Bass, an ICAEW member since November 1982, was severely reprimanded and fined £14,700, along with being ordered to pay costs of £9,140, after failing to provide evidence to ICAEW to demonstrate his firm’s compliance with anti-money laundering (AML) procedures. 

Bass admitted during his oral submission to the tribunal that his inaction was down to feeling “overwhelmed” by the issues raised and he got to the point where he couldn’t open any letters. 

As reported in April’s disciplinary orders, the sole practitioner’s AML shortcomings were uncovered during a routine cyclical review monitoring visit in March 2011. The extent of the AML issues identified by the reviewer were not sufficient enough to refer to the practice assurance committee, so the case was closed based on the assurances from Bass. 

However, suspicion was raised after Bass's firm did not submit practice assurance annual returns and a QAD meeting was held in March 2019 about the sole practitioner’s lack of progress in addressing his firm’s AML procedures.

Failure to provide information

Bass followed up that meeting later that same month with the action he intended to take, including a firm-wide risk assessment within the following six weeks in addition to carrying out client due diligence reviews and keeping records of this. 

The QAD, however, needed further assurance that Bass was upholding his record-keeping and AML processes, but the regulatory practice group case manager’s requests for information sent between July and September 2019 remained unanswered.

At this point, the case was escalated to the practice assurance committee in 2019 and then the professional conduct committee in 2020. 

This is when Bass was confronted with seven complaints ranging from failure to provide the requested information to failure to provide evidence of this documented risk assessments and customer due diligence, and not providing annual returns for 2018, 2020 and 2021. 

On the day of the tribunal, Bass did provide the outstanding annual returns and confirmation of his indemnity insurance. 

When asked about his AML procedures and reasons for not providing the information about his due diligence, Bass said that he had become “overwhelmed” by the situation. He accepted he should have done more to address the issues but he kept putting it off. 

Sentencing

Bass’s failure to provide information, respond to the QAD, provide AML evidence and provide annual returns equated to six complaints and each came with financial sanction. 

Judging all the complaints in the round, the tribunal decided to severely reprimand Bass and issued a financial penalty of £21,000 which was reduced by 30% to £14,700 because he had made a full admission. 

Combined with having to pay costs of £9,140, the total financial penalty and costs were £23,840. Bass will pay the sum in 12 instalments of £1,986.67 per calendar month. In addition, the ICAEW disciplinary committee also ordered Bass to undertake a QAD visit, at his cost, in 2023 and provide the information requested back in 2019. 

A common theme

AML non-compliance has become a common theme in recent disciplinary reports. Last month ACCA expelled a member for lying about their AML policy after they falsely claimed their policy had been in existence longer than it actually had; while in December ACCA excluded an accountant after he failed to keep up with the AML procedures because he didn’t think the rules applied to his small business clients. 

These exclusions come as the government has unveiled plans to toughen up AML supervision. This drive to make AML supervision more rigorous will likely cascade down to accountants as professional bodies feel more pressure to combat money laundering.  

Replies (65)

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Replying to sarah douglas:
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By carnmores
26th Apr 2023 18:34

Thank you Sarah what a lovely reply

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Replying to carnmores:
Sarah Douglas - HouseTree Business Ltd
By sarah douglas
26th Apr 2023 19:02

double post

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Replying to carnmores:
Sarah Douglas - HouseTree Business Ltd
By sarah douglas
26th Apr 2023 19:02

Thank you carnmores that is appreciated.

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Replying to carnmores:
Sarah Douglas - HouseTree Business Ltd
By sarah douglas
26th Apr 2023 19:02

double post

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Replying to carnmores:
Sarah Douglas - HouseTree Business Ltd
By sarah douglas
26th Apr 2023 19:02

double post

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Replying to sarah douglas:
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By johnjenkins
27th Apr 2023 09:48

Now we know why auditors can't get the figures right. They're too busy getting the compliant boxes ticked.

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Replying to sarah douglas:
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By BryanS1958
27th Apr 2023 16:32

Were all your clients medium risk, as the Certified accountancy body seems to suggest they should be?

Do you feel that all the hoops you have had to jump through and all the time and money you/your clients have had to spend has been a worthwhile exercise, leading to a reduction in crime?

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Replying to BryanS1958:
Sarah Douglas - HouseTree Business Ltd
By sarah douglas
27th Apr 2023 18:12

Having been in practice 22 years all of my clients were not medium risk as that is judged when you do the risk assessment for each client and they are different types of businesses. Some were Low, medium and high and inspector agreed with those assessments.

I am no fan of extra administrative tasks and the extra workload, but what I will say is that the due diligence has made me question over the years the type of clients we want. My answer to your question about stopping any crime I would say I do not know.

However I do think the due diligence in meetings has saved us from heartache and possibly saved us from anyone untoward. It is now all part of our onboarding process and quick annual review. I hate admin so yes we worked hard to make the process as painless as we can.

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Morph
By kevinringer
27th Apr 2023 21:48

This article focusses on whether software can help agents comply with AML. The article AWeb should have written is whether AML is fit for purpose at all. I know AML is the law and we have to comply, but given the huge cost in time alone, is the benefit worth the cost? How many hours do we practitioners spend on AML compliance annually? Let’s say I spend about 100 hours a year on AML compliance. Perhaps software could save time, but there'd be a cost to the software. Either way, I have to bear the cost of time and software. How many SARs have I submitted that have actually resulted in action by SOCA? I will never know, but my guess would be zero. This means since AML was introduced, at least 2000 hours of my time has probably resulted in no benefit at all to Government. Of course, the Government doesn't pay me for those 2000 hours, so there is no apparent cost to the Government for getting that zero useful information. But there is a cost in terms of lost productivity, and therefore lost tax. Therefore, the Government should be asking itself, is the lost tax worth the nil SOCA actions? Of course not. If my experience is typical of the thousands of accountants in the UK, that means we’ve spent millions of hours of accountants' time across the nation with huge cost to the Treasury in lost tax revenue, and I suspect SOCA has gained little from it.

When we read about money laundering and crime on AWeb, it appears that it isn't the criminals that we read about, but the practitioners who have failed to tick the right AML boxes. Take https://www.accountingweb.co.uk/practice/general-practice/accountant-fin... as an example. The guilty party isn’t guilty of money laundering, but guilty of failed AML compliance. There doesn’t seem to be any interest in catching those guilty of money laundering itself. Perhaps resources should be moved from AML compliance, to actually catching the criminals. AML compliance seems too focused on box ticking and not on the purpose of AML. After all, a money laundering accountant could produce a perfect set of AML records, so the standard of AML compliance is no assurance that ML is not occurring.

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Replying to kevinringer:
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By carnmores
27th Apr 2023 22:14

Not well said... Excellently well written

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Replying to kevinringer:
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By johnjenkins
28th Apr 2023 10:11

Kevin, I've been saying this for donkey's years, the only time figures (which to me are the most important part of Accountancy) are checked properly is a full blown HMRC investigation. Even VAT and PAYE investigations don't go that far. The Accounting profession doesn't need this level of compliance, and as you quite rightly imply, AML isn't fit for purpose. In fact the whole of our economic set up is not fit for purpose. When the rich get richer and the poor get poorer there is something drastically wrong, although those with the power won't agree.

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Replying to kevinringer:
David Winch
By David Winch
28th Apr 2023 14:08

Kevin, you have done yourself something of a dis-service by repeatedly referring to SOCA - when the agency's name was changed to the NCA many years ago. This sort of a slip of the pen could give a regulator the impression that you are not keeping up to date with your AML compliance.
Please don't gift your regulator a stick to beat you with!
David

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Replying to davidwinch:
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By carnmores
28th Apr 2023 14:20

David i must stop all my clients talking about the Inland Revenue
:-)

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Replying to davidwinch:
Morph
By kevinringer
28th Apr 2023 14:34

Good point David, because it is just the sort of thing they might pick up on: the point of my posting. I use the old name because more people tend to know what it refers to. It's a bit like the continued reference to Customs & Excise for some years after it merged into HMRC.

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Replying to davidwinch:
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By BryanS1958
02nd May 2023 09:55

I wouldn't let that detract from the well made points.

If they are worried about whether the accountant is using the right terminology, it just goes to show what a lot of jobsworths the regulators are!

How about they concentrate their resources on finding crime?

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