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Sole practitioner didn’t think AML regulations applied to him | accountingweb
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Practitioner didn’t think AML rules applied to him

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A sole practitioner has been excluded from ACCA after he failed to keep up with his anti-money laundering policies and procedures because he didn’t think any of his small clients were a major risk. 

15th Dec 2022
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Bilal Al Hasan admitted to an officer from the Association of Chartered Certified Accountants (ACCA) anti-money laundering (AML) team that as a small practice looking after very small clients, he did not know whether AML policies and procedures were needed. An ACCA member since May 1981, Al Hasan asserted that he didn’t “feel any of his clients are a major risk for money laundering”.

He was excluded from the professional body earlier this month following a protracted back and forth with the ACCA AML team and disciplinary officers after his AML processes were still not considered satisfactory. This was despite several opportunities being provided by the regulator for Al Hasan to remedy his non-compliance with the regulations. At every step of the process, Al Hasan insisted that he is a “small operator” and that all his clients are “low risk”. 

“I simply do not have the time, the money, or the ability to attend to a role that will only be suitable for much bigger practices,” he said in a letter to ACCA's Disciplinary Committee in August 2022. 

AML breaches

Al Hasan’s AML failings first came to light during a routine desk-based monitoring review of his firm Ashmere & Co in May 2021. Al Hasan immediately admitted to the ACCA officer that he hasn’t completed a firm-wide risk assessment and when asked if he had documented AML policies in place, the sole practitioner responded: “Except for the terms and conditions, not really, no.”

Al Hasan also didn’t keep up with any AML training, saying that he attended a webinar or seminar “some time ago” and he had last completed an AML training around three or four years before the routine ACCA review. 

All of Al Hasan’s clients came through referrals, as he didn’t have a website, and when it came to risk assessments, he said he relied on an “informal process”.

He would only take on a client if it felt comfortable, but he didn’t carry out a new client form for each client about the services they offer, nor use any electronic verification as part of his onboarding process. 

Al Hasan told the ACCA officer that the anti-money laundering procedures would make his clients leave, and that he has not encountered any problems with his previous clients.

Failure to address breaches

That initial telephone interview spiralled into a back-and-forth correspondence with an ACCA investigation officer from July 2021 until October 2021. ACCA took the view that Al Hasan had failed to sufficiently address the AML processes in his firm, despite the regulator setting out the actions it expected Al Hasan to take, providing guidance documents and granting extensions to allow extra time for compliance.

During the investigation, Al Hasan blamed his lack of response on the “stress and anxiety” of having to “adhere to ACCA requirements”. He asked the investigation officer: “Are you doing this to every practitioner or only the ones caught out?”

While he didn’t change the processes to the standard expected from ACCA, Al Hasan told the AML team that he had reviewed a lot of AML policies including those set up by the Law Society and felt they were “too comprehensive for a sole practitioner”. His son who is a chartered accountant “found such policy as set by ICAEW for small operators” and concluded that he now has “a policy tailored for my practice”.

The situation was referred to the senior investigating officer who warned Al Hasan to comply with the money laundering regulations. But in September 2021 the ACCA member again claimed his clients are “so small that they do not pose any risk”. He added, “I have been in practice for 21 years, and I have never encountered a substantial move of funds, sudden wealth, or unexplained presence of funds.” 

The senior investigator contacted Al Hasan again in November 2021 after a couple of months went by without the member providing satisfactory evidence that he had addressed the AML breaches. He was notified that the case would be escalated to a disciplinary matter. 

Small operator

Al Hasan called the decision to refer him to a disciplinary committee “harsh” and refused to defend himself, reasoning: “Whatever I did was not enough, although a fellow certified accountant, a chartered accountant, and a lawyer said it was good enough. I AM A SMALL OPERATOR. I have nothing to add to my policies and procedures, firm-wide risk assessment, and [customer due diligence]. I am not your model AML operator.”

Al Hasan was just as defiant in his letter to the disciplinary committee in August 2022. He said that as a “lone practitioner” what ACCA requires from AML compliance is “far-fetched and totally unreasonable”.

He went on to say that ACCA has thrown on him compliance they’d expect from “multi-national, multi-partner, multi-hundred employee practices”. 

He claimed that although he is “very busy” and “cannot spend too much time reading emails and other literature” his prospective clients are vetted and he has subscribed to AML software provider Smart Search. 

He signed off the letter by complaining that ACCA never provided help when he “cried for it” and “did not even bother to reply to me”.

“I have attended to all feasible requirements of ACCA and beyond. I may differ in opinion, but I abided by their recommendations. ACCA should devise varied policies suitable for different practices (courses for horses). You simply do not expect landlocked countries to produce submarines.”

Disciplinary hearing

Al Hasan did not attend the disciplinary hearing, calling the process “degrading and insulting” and the allegations were found proved against him, in his absence. The committee noted that ”at no stage… did Mr Al Hasan dispute the findings made by [the investigating officer], but rather he seemed to consider they did not really apply to him as a small firm and that in any event he considered he had rectified the position.”

In sanctioning the member, the disciplinary committee acknowledged that Al Hasan provided some responses to the investigating officer but he had not provided what was asked for and what he did provide was inadequate to satisfy the regulatory requirements. 

The committee considered that Al Hasan had demonstrated a “complete lack of insight and understanding” in regards to the AML regulations, which the committee considered was serious and was concerned that he would not take the required steps to address his non-compliance.

The committee also treated Al Hasan's lack of co-operation with the investigation as serious misconduct, describing it as a “fundamentally incompatible with membership of ACCA”. The committee further considered that there were a number of aggravating features present and a lack of mitigating factors, which lead them to the conclusion that exclusion from the professional body was the only appropriate sanction.

In addition to the exclusion, ACCA also ordered Al Hasan to pay costs of £8,400.

Ben Schofield, a senior solicitor at Blake Morgan said:

Readers may have some sympathy with Mr Al Hasan’s difficulties. It is often the case that smaller practices, with their more limited resources, can face more of a challenge in trying to keep up with their compliance requirements. However, as this case shows, the AML regulations don’t contain an opt-out feature and they apply to all practices regardless of their size.

AML regulations cover a number of different professions and as their core function is an attempt to reduce criminal and terrorist financing, it should come as no surprise that the accountancy professional bodies considered them an important feature of the regulatory landscape.

There is guidance out there to be found. The CCAB publishes important guidance on this topic. The courts and regulators must consider this guidance when deciding if a practice has met the requirements which are subject to an investigation. The regulators themselves also publish guidance for this area and the ICEAW publishes guidance specifically aimed at small practices. There is plenty of guidance also available from CPD providers and there are a number of articles also to be found here on AccountingWEB.

This case should show that regardless of the burden, the investment in ensuring your practice is compliant is worth much more than the potential regulatory fall-out if you are not.

This case is also notable for Mr Al Hasan’s approach to the regulatory investigation and the final disciplinary hearing. While perhaps Mr Al Hasan’s entrenched position on continued non-compliance with the regulations leads to only one outcome, he didn’t appear to have helped himself on the way.

It is always worth remembering that there is an obligation on members to co-operate with their regulators and a failure to do so can amount to misconduct of its own. Regulatory investigations never come at a good time. They are often stressful and emotions can start to run high. There can be a fine line between robustly defending your position and failing in your duty to co-operate.

Mr Al Hasan's decision not to fully engage with the hearing appears to have also significantly increased the costs awarded against him. The evidence appears to show that Mr Al Hasan had admitted the non-compliance from his very first interaction with the investigating officer. But as he did not fully engage with the hearing, the regulator still had to prepare for a full hearing to be able to “prove” the case against him.

While members often worry about the cost of legal representation in investigations, it is often the case that a number of issues can be honed down, which can reduce the costs claimed by the regulator. Most of our clients find the true value is the benefit of having an intermediary to deal with the regulator on their behalf, which removes much of that stress, and who can offer expert advice on how to best present their case before a regulator. Often this value can’t be underestimated when there is a risk of exclusion.

Blake Morgan’s accountancy regulatory team is available to assist with any disciplinary, regulatory and compliance matters arising in the accountancy profession. Click here if you require any of their services.

Replies (37)

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By Hugo Fair
15th Dec 2022 12:50

For anyone who remembers the 'Metric Martyrs', it appears we now have our first 'AML Martyr'!

Although his approach was always only going to end the way it did, I rather like Bilal Al Hasan's use of aphorisms - like "You simply do not expect landlocked countries to produce submarines".

Are we reaching the point where being an ACCA member is a lot more bother than it's worth?

Thanks (18)
Replying to Hugo Fair:
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By Self-Employed and Happy
20th Dec 2022 12:02

Given the huge lack of support during COVID compared with the ICAEW we have looked at swapping over in the next few years.

We felt there was a stark difference in the level of service / support between the two organisations.

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ghm
By TaxTeddy
15th Dec 2022 15:00

"You simply do not expect landlocked countries to produce submarines."

Had he done his research he would have found that Subspirit AG of Switzerland, in fact do.

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Replying to TaxTeddy:
By SteveHa
16th Dec 2022 09:31

He talked of expectation, not what actually happens.

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By GHarr497688
15th Dec 2022 16:42

I am afraid not to comply and so I do. I still can't understand why the Fee is similar for different size business, who someone who has no Accountant is not vetted by HMRC themselves as they could be ML or FCA under the radar. I can't see why the in-house employed accountant escapes the rules when an external accountant must comply.I can't see why everyone says most reports are ignored. I don't understand why one size fits all. I am not sure why the rules appear to be procedural and almost impossible to police. I would think a self- certification tool operated by HMRC might get a better result although as HMRC can't even run the tax systems efficiently make massive mistakes daily . can't answer letter and phone calls etc etc I would think is then that need a DD review in themselves.

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Chris M
By mr. mischief
15th Dec 2022 16:55

I think any hint of complacency or "I see no reason why this applies to me" is totally unaccptable in this area I am afraid. I've done a couple of SOCO ( or whatever the current acronym is) reports in my time. I am a sole practitioner and have had a couple of high risk clients down the years involving lots of extra checking.

One was just moving money around a lot, overall I felt he was more likely to be the unwitting victim of a genuine moneylaunderer taking advantage of his naivety than anything. But had the ICAEW asked for chapter and verse on the guy, they would have got it.

The other one in my view is as clean as they come. But her role has involved working on the Chernobyl Sarcophagus project and projects in Russia and other FSU countries with a proud history of dodgy financial dealings, many of them facilitated by UK banks and Governments of course but that's another story. Again, had chapter and verse been required by ICAEW they'd have had it within the hour.

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Replying to mr. mischief:
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By Postingcomments
15th Dec 2022 20:29

"Govern me harder, Daddy, because I'm so scared of all the things you tell me to be scared of - terrorists, viruses etc. Please keep me safe, Daddy Government, I'll do anything you say"

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Replying to mr. mischief:
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By paul s&w
20th Dec 2022 11:35

Surely ICAEW can only ask for information on your AML systems and their operaton.
Passing confidential information about a client to ICAEW cannot be within their remit

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Replying to paul s&w:
David Winch
By David Winch
20th Dec 2022 12:08

Have you considered s333D(1)(a) PoCA 2002 which seemingly was written with such disclosures in mind?
https://www.legislation.gov.uk/ukpga/2002/29/section/333D

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paddle steamer
By DJKL
15th Dec 2022 18:51

Of course if Mr Al Hasan wishes to remain in practice he will still need to operate AML processes, just not for ACCA, so not sure what he gains here unless he is retiring.

(Even as a non qualified I operated AML processes for my clients however low risk they all were.)

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By Calculatorboy
16th Dec 2022 10:03

How can these private organisations levy such an extortionate penalty, sounds like they are enriching themselves at expense of members who are deemed wretched sinners. They sound as if they'd happily use the birch or cat of 9 tails as well..were they allowed

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By copperfield.21
16th Dec 2022 10:15

Whats the problem. Do a report and charge for it, I may add I have done since inception and no client objects.

Much ado about nothing!

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By Jdopus
16th Dec 2022 10:18

Having recently had to write a policy on how my small local accountancy practice will report potential chemical or nuclear weapon smuggling suspicions as part of our standard ACCA AML policy requirements I have to say that I have a lot of sympathy with the views expressed by Mr Al Hasan.

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Replying to Jdopus:
David Winch
By David Winch
20th Dec 2022 10:54

May I suggest a brief note to the effect that (if it be the case) 'our firm does not have any clients connected with the production or sale of weapons'.
David

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By Calculatorboy
16th Dec 2022 13:35

All might not be lost for Mr Hasan ..he might have the last laugh . I note his son is a chartered accountant so perhaps his client base might be saved intact in one form or another.. with the ACCA deprived of a future stream of income from him

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Replying to Calculatorboy:
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By GTUA
20th Dec 2022 10:07

Not in any way advocating Mr Hasan's approach, but can't help feeling he'll be better off without the ACCA. I'll bet his clients won't care if he's an ACCA or not if they are coming from personal recommendation. HMRC AML supervision will do nicely!

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By TAS1234
20th Dec 2022 10:03

I have every sympathy for Mr Hasan. As usual, with all forms of beaurocracy, it's "one fit all" regardless of the financial impact on small practitioners. The audit fines imposed on the "Big 4" and the money laundering by HSBC in the past few years show where the problems lie, not with small practitioners trying to earn a living.

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By Rgab1947
20th Dec 2022 10:09

The biggest money launderers have been and probably still are, are the banks. Lots of internal procedures which they ignore. Billions laundered, billions in fines (which ultimately customers pay). None of the directors are precluded from directorship and few go to jail.

I feel for Mr Al Hasan and wish there was clothing for different sizes but unfortunately AML is a burden we have to carry.

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By Willaja
20th Dec 2022 10:15

George Orwell was spot on; he just got the date wrong.

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By [email protected]
20th Dec 2022 10:32

There is a theme to this stuff which shows up all over the place. The government identifies a sin which needs addressing (we would probably agree them) but simply doesn't have or won't allocate the resources to deal with it themselves.
Solution: legislate to devolve the responsibility to some third party (see immigration/residential landlords for a worked example) and then punish the third party for failing to enforce their policy.
And the third party has to pick up the costs and inconvenience of the procedures in order to comply, all the while thinking "how and when did this become my problem?".
Delegated law enforcement with the ultimate customer meeting the cost? When I was student we made jokes about making the police self funding but I don't think we envisaged it being a reality.

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By MDK45
20th Dec 2022 10:43

I do have some sympathy for the one sizes fits all approach. I still have a practicing licence but only about 5 landlord clients with simple tax affairs whom I have known for years. I have no intention to take on more clients and really just use my company as a freelancing vehicle to go 'temping'. All this compliance makes me wonder if it's worth the effort anymore.

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SMH
By ShakingMyHead
20th Dec 2022 10:57

When I think about the effort, the exams, the ordeal of qualifying to become an ACCA member (and he has been since 1991), and then for this to happen... to be booted out and fined - it's dreadful. I feel for him BUT, regardless... even if HMRC becomes his new AML overlord... he will have to comply. It's a PITA. But, there's no shying away from it. Sometimes I think all this red tape and compliance is just to put people off working for themselves. Just get a job and let some other mug shoulder the burden and responsibility. And that fine... £8,400 ???!! 'Criminals' aren't even charged that!!!!

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David Winch
By David Winch
20th Dec 2022 10:59

I can't help thinking that if he had approached the regulators in a rather more nuanced way he could have (1) persuaded them that he was doing a lot of the necessary things - albeit perhaps not recording them fully, and (2) done some relatively painless tweaking to satisfy the regulators.
David

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By Marlinman
20th Dec 2022 11:43

If the government were to pay us for doing their dirty work it wouldn't be so bad

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By Self-Employed and Happy
20th Dec 2022 12:22

Thinking about this...

Why do we complete AML checks, essentially it isn't REALLY for us, it's for Government.

So why can't clients complete AML Directly with the Government and be given an AML Number (once accepted) which lasts 3 years, they then pass the AML number onto us to show we have asked if they are "AML Cleared".

Essentially it's a task that we are made to complete, is probably replicated many times over (think solicitors / banks etc), so it would make sense for a central AML Reference Number that could be used by multiple professions.

Thanks (4)
Replying to Self-Employed and Happy:
David Winch
By David Winch
20th Dec 2022 12:35

That could confirm the client's ID, but you would still need to do your own AML risk assessment of the client (taking into account their activities etc). So in effect it would be the same as asking to see a passport / driving licence.
David

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Replying to davidwinch:
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By Hugo Fair
20th Dec 2022 14:01

Not necessarily.

Take DBS (or CRB as was).
I was one amongst many pushing for a 'portable' version that could be taken by the individual to potential employers (instead of each employer having to start a new clearance process) ... but we were told this was impossible (for a variety of reasons including that it would only identify the person and would become out-of-date quickly).

Until of course it was announced, several years later, that this WAS now possible - and remains so, working fine.

Thanks (1)
Replying to Hugo Fair:
David Winch
By David Winch
20th Dec 2022 14:54

But DBS is basically factual. The key ingredient is past convictions for certain types of offences.
The AML risk assessment is your opinion of money laundering / terrorist financing risk of offences for which the client has not been convicted (or even investigated).
The client's bank, for example, may have information (which you as the accountant do not have) which causes them to form a different assessment of that client's AML risk. The bank would be unable to share that assessment with you.

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Replying to davidwinch:
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By Hugo Fair
20th Dec 2022 15:49

Hmm. I take your point, but DBS is a lot more nuanced that just "factual" ... it takes into account 'suspicions' and 'concerns' that may not be supported by any evidence.

Indeed it was the need for these 'unofficial jottings' to be properly incorporated into profiles, based on the failures of Police force sharing info to be applied during the Soham investigations, that led to the creation of the CRB.
And with DBS it is now an offence for a relevant employer to NOT report their suspicions - precisely because, like AML, the objective is to identify and prevent BEFORE a problem arises.

The difference with AML is that no-one in govt had the foresight (or budget) to set-up a central database (with co-ordinated processes) such that a national register could be maintained.
No system is perfect ... but the current approach to AML reeks of a combination of attempted outsourcing of the issue and merely paying lip-service to prevention (in case any wealthy friends - individual or governmental - are embarrassed).

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By Ian McTernan CTA
20th Dec 2022 13:59

The costs are dispropotionate to the results, especially for smaller practices, along with the massive annual cost of the register itself.

Having said that, it's the law/requirement of membership. Do I like doing it or paying for it? No. But I do it anyway, even though none of my clients are even slightly risky, because that is what is required. Lots of paperwork for nothing, and massive fines if you don't comply relative to turnover, compared to 0.00001% if you're a big firm....

Of course if our Institutes put up more of a fight and advocated for the smaller practices we might have seen better rules and procedures...a bit like my current bug bear of the ADL (CIOT where is your ripping apart HMRC response?) and the income record viewer (nope, just because your already their agent, go register YET again- hello CIOT, where is the fight back?).

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By Jack the Lad
20th Dec 2022 16:15

Notwithstanding David Winch's excellent comments, I also have a great deal, of sympathy with Mr Al Hasan. As far as small practitioners (like myself) are concerned, the AML Regulations are a sledgehammer to crack a nut, and totally out of proportion to the risks involved in small business and individual clients. The regulations were designed for much larger practitioners, and as many have stated, one size does not fit all. Some leeway should have been given taking his limited risks into account. The punishment certainly does not fit the crime here! This is true when taking into account what most of the banks and larger practices are probably getting away with daily.

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Replying to Jack the Lad:
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By GSWB1954
20th Dec 2022 17:20

Jack the Lad’s comments are spot on but where can our voice be heard. I used to think that the Tories supported small business and entrepreneurs and that when we left the EU, red tape would gradually disappear. Not so, it appears. If anything, it’s worse. IR35, Reverse Charge VAT, MTD quarterly filing, 3% workplace pension charge for employees, HMRC meltdown; I’m sure there’s much more. Used to love running my small private practice (300 clients). That’s long gone.

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By RogerMT
21st Dec 2022 12:04

Like most, I have a lot of sympathy with Mr Hasan, and kudos to him for having the cojones to take a stance against the rampant bureaucracy we now live under. Or maybe he was just staggeringly naive, who knows?
We have the odd situation in this country were blatant corruption is laid before us virtually every day from the powers that be, and the perpetrators just get away with it, time after time. Billions lost in fraudulent PPE contracts awarded to government cronies with literally no experience or history in the manufacture of said items, and companies with a history in the field ignored being the most obvious example lately. I suppose I should say "allegedly" here. While on the other hand, you and I have to waste hours of unbillable time to put every taxi driver, jobbing subby, and Uncle Tom Cobley and all through a ludicrously lengthy, over-complicated, and frankly pointless reporting process just to satisfy some jobsworth at our regulatory body, who then up their fees considerably for the privilege. And, in the very rare instance when we do send reports in to the NCA, as far as I can tell, absolutely nothing happens.
Roll on retirement, it can't come soon enough!

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Replying to RogerMT:
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By TAS1234
21st Dec 2022 12:16

Here here Roger. The jobsworth at my Institute must have been trained by the old KGB!

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Replying to TAS1234:
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By RogerMT
21st Dec 2022 14:00

A relation of Putin's then? :)

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By AndrewV12
21st Dec 2022 13:25

Yet again the little Guy kops it, though he had many chances to get off the hook.

Lets not forget Under the Money Laundering Regulations, institutions must have systems in place to stop suspected money laundering from their customers. On 13 December 2021, NatWest was fined £265 million after it pleaded guilty to three counts of failing to properly monitor £365 million deposited into the account of a Bradford jeweller.

Were NatWest stuck off, unsure what they can be stuck off from but there you go.

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By rbien1
09th May 2023 11:26

I am not suprised UK econmy is going down... UK is becoming bureaucratic, backward economy . I have experince from other coutries , in Poland, they have 10 time less compliance burden and the economy is booming . In UK only big corparations and bureaucrats are doing well.... the economy is going dowm, free market economy is gone.... countries like Poland and Romania are taking over.... but people are scared to stop the dwon hill trend , everyone wants to keeps their businesss , qulifications .... is there any hope left for us (SME) ???

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