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Accountant winding down fined £7k for AML failures

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A chartered accountant winding down his practice was severely reprimanded and fined £7,000 for not carrying out anti-money laundering client checks.

14th May 2024
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Mark Thompson, a member of the Institute of Chartered Accountants in England and Wales (ICAEW) since 1991, admitted that his money-laundering checks fell below standards in a recent disciplinary tribunal that underlined the importance of promptly complying with the regulations. 

Although the Lancashire-based accountant accepted that he had not done the required money-laundering checks, he said in his defence that he knew his client base “very well” and had no reason to have any suspicions. Since he saw his clients at their premises, he said he had a “good feel” for whether their circumstances married up with their business activities. 

Pulled up in a monitoring review

Thompson first fell foul of the institute’s professional standards after the quality assurance department (QAD) undertook a monitoring review of his firm in December 2016 and discovered that while he saw identification for his prospective clients when he met them, he didn’t always take a copy. 

After being pulled up on his lack of documented risk assessments on existing and new clients, Thompson responded that he had signed up to the electronic checking system Creditsafe. He informed ICAEW that he was going to use this system to screen new clients and check existing clients.  

The professional conduct department (PCD) followed up in April 2017 asking for a copy of the completed client due diligence documentation for new and existing clients. He was first given the deadline of 2 May 2017, but that date came and went and Thompson asked for an extension for personal reasons. 

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Replies (32)

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By FactChecker
14th May 2024 18:53

There's something strange about this case ... beyond the, yet again, extraordinarily heavy-handed treatment of someone:
- with a previously unblemished record +
- with (unspecified but drastic) personal circumstances +
- with a tiny business from which he had already retired having resigned his institute membership.

But I also had a strong sense of déjà vu .. in that I knew exactly what was coming in the next para all the way through. So, despite the case being reported as heard in March this year, were there any prior hearings reported - or is this just a horribly frequent performance by the Institute?

Thanks (14)
Replying to FactChecker:
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By rmillaree
15th May 2024 10:04

surely the fact this individual seemed to carry on doing things their way rather than addresing the obvious prod is the issue. in the real world though there is a middle ground here that there seems that then ICAEW seem inept at closing something down in minimal fuss manner IF that person no longer wants to be a member - or simply remove membership tuit suite.

Thanks (4)
Replying to rmillaree:
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By FactChecker
15th May 2024 12:23

Agree with both points ...

* He undoubtedly ignored (or as some respondents seem to feel put two fingers up to) the Institute - but they, not he, referred to his "extremely difficult personal circumstances". We don't, and don't need to, know what those were but they sound like considerable mitigation.

* He was obviously semi-retired (t/o below £10k with fewer than 10 clients) AND had said he wished to leave the institute. Unfortunately (but in line with his dilatory approach to paperwork), he simply stopped sending in annual returns and paying subscription fees (having announced that he no longer wished to be a chartered accountant).

However the ICAEW, noting that every firm is required to submit a return confirming its compliance with the regulations, decided that (by not submitting an annual return for the years 2018, 2019 and 2020) Thompson left himself open for three more disciplinary complaints!
And with five complaints now against him, called him to the disciplinary tribunal.

So both parties had the same objective end-result - yet one used its powers to take a chunk out of the other's finances even as he was departing!
Inept? I'd say malicious.

Thanks (7)
Replying to FactChecker:
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By rmillaree
15th May 2024 12:49

i think there defence would be

"we need to send a strong message to members that this paperwork is important" - i do think though it probably sends the wrong message for those at the lower end of the scale who probably think why am i member here.

Thanks (4)
Replying to rmillaree:
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By Paul Crowley
15th May 2024 12:44

It comes over to me as punishment for the sake of it.
AML is a state of mind, investigative when needed and looking for oddities. Chances are that his long term clients were not terrorists.

Thanks (9)
Replying to FactChecker:
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By Paul Crowley
15th May 2024 12:51

Deja vu as well. I am sure I have read these circumstances before.
I used to read all the monthly reports. Gave up on it, as it used to depress me so much. No sympathy given for people that are struggling, but who are not a danger to the public.
Big firm penalties for crap auditing are trivial when comparing penalty to the income, but those are causing real losses to investors and are a danger to the public.

Thanks (8)
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By Self-Employed and Happy
15th May 2024 09:51

Heavy handed....yes

But I personally see this as another example of burying your head in the sand, multiple deadlines given and not bothering to heed to them.

Do I agree we should do AML...no it shouldn't be our job but none of the institutes care, they see is as easy money, but for goodness sake how hard is it to get them to sign a LoE, take a copy of ID and a recent utility bill, then fill out a quick risk assessment that takes 5 mins per client (using the ACCA Excel document, I'm sure ICAEW must have something similar).

Thanks (6)
Replying to Self-Employed and Happy:
Lamb
By Rehan1
15th May 2024 19:47

Thanks for sharing your views. I am also ACCA Member and you referred to ACCA Excel Risk assessment document, I would be very greatful if you can shere the link to this document.

Thanks in advance.

Thanks (0)
Replying to Rehan1:
David Winch
By David Winch
15th May 2024 20:04

Rehan1 wrote:

Thanks for sharing your views. I am also ACCA Member and you referred to ACCA Excel Risk assessment document, I would be very greatful if you can shere the link to this document.

Thanks in advance.


https://www.accaglobal.com/gb/en/technical-activities/technical-resource...
This is a link to the ACCA website page about the tool.
Do take careful note of what they say about the tool -
"This Excel document provides a basic know-your-client form and client risk-assessment template that can be used as a starting point. The questions posed are indicative only and not all will be applicable to all clients. They are also non-exhaustive and should be used as a guide only; there may be additional risk factors that will need to be considered and documented."
Do not assume that if you use this tool you are not at risk of criticism from the ACCA on an AML monitoring visit!
David
Thanks (0)
Replying to davidwinch:
Lamb
By Rehan1
15th May 2024 21:36

Thanks David for sharing the tool and your good points about using it.

Thanks (0)
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By Balancing
15th May 2024 09:54

It is my experience that ICAEW turn a blind eye to accountants who do not carry out AML checks. A former London investment banker also quoted a mexican journalist that the UK is the most corrupt place on earth (see link 36.32 minutes) . The odd mention of someone being singled out for AML non compliance goes no-where near the enormous problem of fraud in our country https://www.youtube.com/watch?v=WJNJ4EElXiw

Thanks (3)
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By sammerchant
15th May 2024 10:07

Going down to the battlefield to bayonet the wounded!

Thanks (11)
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By philaccountant
15th May 2024 10:12

https://www.theguardian.com/world/article/2024/may/14/nearly-40-of-dirty...

Yet more time and effort will have been spent harassing this bloke and forcing endless bureaucracy on the rest of us than chasing the real criminals. Perhaps because a lot of the money launderers have ties to the current ruling party?

Thanks (13)
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By Andy Hull
15th May 2024 10:14

I don't have a dog in this fight, I wouldn't work in practice for love or money. But it just seems silly to me, the checks would never catch/ deter a real money launderer. Mr. Escobar will have as many passports/ IDs/ utility bills as you like.

Thanks (19)
Replying to Andy Hull:
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By rmillaree
15th May 2024 10:30

the crime here is presumably not kowtowing to what is being demanded be done by icaew and hmrc rather than basing crimes on real world risks. in that regard meeting up with people and viewing id seems sensible - perhaps a crook would though perhaps say yes i did see the id i just didnt take a copy when later quizzed if they were trying to come up with cover story if they had not seen said id.

Thanks (1)
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By petestar1969
15th May 2024 10:19

The firm that did our AML training told us we were low risk for Money Laundering, really?

Thanks (1)
By Duggimon
15th May 2024 10:36

Wild all the people jumping in to defend him. We're required by law to comply with the AML legislation. He didn't. He was advised in 2016 of what he needed to do to comply. He'd still not bothered by 2023, fully seven years later.

AML checks are easy and don't take long. I sympathise with those saying they're a bit of a box ticking exercise unlikely to root out criminals however they are a legal requirement and before raising a disciplinary the Institute were offering help and support in complying.

Again, let me stress, the requirements he had to comply with would have taken roughly one (1) afternoon. And he did nothing for seven years.

Given the work we put in to AML checks, documentation and training, I'd be annoyed if a firm down the road just did nothing at all and the Institute let them off with it because they've not got that many clients and even though it's a law it's not a very serious law and doesn't do much.

The £7k fine is a last resort, not an immediate response to non compliance, and seems reasonable enough.

Thanks (5)
Replying to Duggimon:
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By sammerchant
22nd May 2024 10:47

I think the penalty should be commensurate with the failure and is obviously excessive. It seems to be designed pour encourager les autres and is therefore unfair.

Thanks (1)
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By Marlinman
15th May 2024 11:11

I wonder if the ICAEW through their money laundering supervision have ever caught a crooked accountant who deals with professional money launderers in the underworld and makes a lot of money from it. They just seem to be very heavy handed with sole practitioners with a few small clients.

Thanks (10)
Replying to Marlinman:
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By Andy Hull
15th May 2024 11:20

About as often as an ICAEW auditor (or any other sort) has uncovered a major accounting scandal

Thanks (7)
Chris M
By mr. mischief
15th May 2024 12:59

I have added to my to do list a draft undated resignation letter to ICAEW, ready to date and sign at the first sign of any of this starting with me.

Thanks (2)
Replying to mr. mischief:
DougScott
By Dougscott
15th May 2024 14:05

Why not resign now and save the subs? Can't say it ever hindered my career not being an ICAEW (and I do my AML stuff despite not being a "proper" accountant and only having a few clients).

Thanks (1)
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By Rob Swan
15th May 2024 13:12

What good has AML ever done over practical common sense?
(Unless you make money out of it, of course!)

Yet another example of needless harm and expense - IMHO.

Thanks (3)
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By indomitable
15th May 2024 13:19

What I want to know is has anyone been caught doing money laundering checks? I would presume very few if any. Much more money laundering going on in the black economy and through other complex tax avoidence/ evasion scams etc. etc. something which doing an AML check will not catch

A completely useless system that costs far more than it does in catching anyone. A Typical government knee jerk reaction and of course put the onus on the professional so that no-one in government has to deal with it. And don't get me started on the accounting governing bodies. Useless in my view more interested in diversity and ERG than real issues that affect its members

Thanks (8)
David Winch
By David Winch
15th May 2024 14:01

There are some lessons here.
Firstly please reflect on the anxiety all this has caused to this accountant over a period of years. In some ways that will have been a more significant 'penalty' than the monetary one.
Secondly, do deal with the things you promised to do after your last inspection.
A lot of AML compliance is about DOCUMENTATION.
Accountants need to be aware of what I call 'supervisory body' risk (rather than money laundering risk). In this case there was no evidence about money laundering by his clients.
There will certainly be more disciplinary cases re AML compliance inadequacies.
David

Thanks (3)
Replying to davidwinch:
By Nick Graves
15th May 2024 15:32

davidwinch wrote:

There are some lessons here.
Firstly please reflect on the anxiety all this has caused to this accountant over a period of years. In some ways that will have been a more significant 'penalty' than the monetary one.
Secondly, do deal with the things you promised to do after your last inspection.
A lot of AML compliance is about DOCUMENTATION.
Accountants need to be aware of what I call 'supervisory body' risk (rather than money laundering risk). In this case there was no evidence about money laundering by his clients.
There will certainly be more disciplinary cases re AML compliance inadequacies.
David

Nice one!

Yes, it reminds me of the Piranha Brothers and breaking the unwritten rule because it wasn't written down...

Oh no - it's Spiny Norman again...

Thanks (1)
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By carnmores
15th May 2024 14:15

99% of AML is a complete waste of everybody's time.

Thanks (5)
Replying to carnmores:
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By Rob Swan
15th May 2024 14:38

Tempted to respond flippantly but.....
....I honestly think the 'waste' is well OVER 100%....

Anyone with bookkeeper, accountant, solicitor, .... (the list is long) has beem AML'd many times, hence wasted time, effort, money... well over 100%.

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Replying to Rob Swan:
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By carnmores
15th May 2024 15:11

:-) Rob i would challenge the notion that you can have more than 100%

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Replying to carnmores:
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By FactChecker
15th May 2024 17:15

Once heard that challenge issued to one of the worst offenders (a football coach of course), who briefly looked puzzled before replying:
"I thought you were an accountant - surely you can give everything and then borrow a little more"?

Thanks (3)
Replying to carnmores:
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By Rob Swan
15th May 2024 18:02

In reply carnmores:
It's a simple case of double counting:- 1000 clients, each employ two professionls from the pool of those subject to AML. That's 2000 AML checks for 1000 clients. I call that 200%.
In reply to your 99%...
...on what basis do you claim that 1% of AML is not a waste of time? ;)

Thanks (1)
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By Marlinman
16th May 2024 06:02

The big time money launderers have their own bent accountants. The small guy with a few grand in undisclosed cash takings wouldn't be stupid enough to pay it into a bank, he'd just spend it and have a good time. All the money laundering red tape and checklists isn't going to detect or stop any of this.

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