take appropriate steps to identify and assess the risks of money laundering and terrorist financing to which its business is subject [Regulation breach 18(1)]
keep an up-to-date record in writing of all the steps it has taken [Regulation breach 18 (4)]
establish and maintain policies, controls and procedures to mitigate and manage effectively the risks of money laundering such as review and update policies and maintain a record in writing [Regulation breach 19 (1)]
keep documents of due diligence requirements for at least five years Regulation breach 40(1)]
Accstax did not receive the biggest fine on the list. That punishment went to Ram Jewellers Ltd which was slapped with a £1,834 fine due to breaches in policies, controls and procedures, and record-keeping.
Next in line was Gem Craft Lapidary Ltd, which amassed the most regulation breaches – six in total – ranging from failures in policies, controls and procedures to due diligence.
Accstax got off lighter than the last accountancy firm listed back in the June 2017 to July 2018, when Bradford-based Delta Tax Agents Ltd was hit with a £5,991 fine. However, that fine is currently under appeal.
HMRC is not the only supervisor to ratchet up its AML compliance, as the other supervisory bodies are likely to add clout to their own checks following a stern push from supervisor of the supervisors OPBAS.
As such, there is even more impetus on accountancy firms to ensure they are on top of their AML compliance.
Money laundering regulation 2017 changes
According to Bartfields Forensic Accountants’ David Winch, these penalties should act as a reminder for accountants to brush up on the details behind the regulations.
“Accountants have been focused, very sensibly, on MTD and other developments, and may have regarded MLR 2017 as simply MLR 2007 with a slight change of name. There’s some truth in that. But one innovation introduced by MLR 2017 was the hierarchy of risk assessments," Winch told AccountingWEB.
“The idea is that the government (HM Treasury and the Home Office) produces a UK risk assessment for MLR, then the supervisory bodies use that to produce a risk assessment focused on their sector, then each firm produces a risk assessment focused on the type of work, type of clients, business sectors, geography, their methods of dealing with the clients that they deal with and then in relation to each client there is an MLR risk assessment.
“So for instance, if the firm has a niche of dealing with, say, pubs and retailers, or deals with clients online rather than face-to-face, that will be reflected in the firm-wide risk assessment.
“Some firms have missed out that firm-wide risk assessment – which is now required by Reg 18 MLR 2017. And that was one of the failures highlighted by HMRC.”
Winch also flagged that the £519 penalty may sound modest, but lurking beneath this would likely be further financial and reputation damage.
“The hassle of dealing with this sort of investigation and disciplinary process from HMRC or the institutes must be considerable,” he added. “This is grief which none of us needs!”