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Top three AML changes that could trip accountants

Anti-money laundering compliance is still confusing for many accountants, with areas such as employee training and beneficial owner checks often overlooked.

20th Apr 2020
Marketing manager
In association with
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As AccountingWEB’s resident AML expert David Winch explained in the New Anti Money Laundering rules: What you need to know guide, many accountants see AML as a waste of time.

However, “It is something that we need to do because governments perceive it as delivering a wider benefit to the public as a whole in preventing, deterring and detecting acquisitive crime and terrorist property offences,” wrote the director of Bartfields Forensic Accountants. 

“Inevitably, you will be subject to examination by your supervisory body from time to time. You may also face the chilling experience of a police officer or HMRC officer arriving unannounced with a production order.”

Yet, many accountants find it difficult to stay up-to-date with the regulations and the changes introduced by the most recent versions. It doesn't help that in the last decade there have been many changes to the regulations. What's more, the 2017 and 2019 versions include a higher level of detail in their requirements than the previous ones.

Nowadays, AML is no longer just about checking the clients’ identity. It is also about checking the client’s sources of funds and reporting clients when there is the suspicion that they are engaged in money laundering or a terrorist property offence.

The new AML rules also move with the times. Whereas due diligence used to involve the inspection of physical ID documents, such as passports or driving licences, alongside utility bills or bank statements (to confirm the client’s address). Now, electronic ID verification is also accepted and it is becoming increasingly common.

In 2020 we might see other amendments to the regulations to meet the requirements of the Sixth Money Laundering Directive. However, many accountants are still grappling with the updates introduced in the last years.

The following are some of the areas in which accountants need to be especially careful to stay compliant:

Tax advisers

In 2019, the Fifth European Money Laundering Directive introduced a new definition of a tax adviser, which is now “firms and sole practitioners who by way of business provide, directly or by way of an arrangement with other persons, material aid, assistance or advice about the tax affairs of other persons”.

This means that assisting clients with the submission of their tax returns, even if no “advice” is provided, falls within the scope of the regulations.

Beneficial owner checks

The beneficial ownership ID check is one of the changes that have more impact for accountants, who need to verify all beneficial company owners as part of their Know Your Customer compliance. To comply with the current regulations, customer due diligence for UK limited companies that are not a listed company needs to include the beneficial owner.

 If the beneficial owner is a company or trust, the customer due diligence has to cover the ownership and control of the beneficial owner.

Training

The anti-money laundering regulations also require firms to provide regular training for staff who are involved in identifying money laundering. Training must be provided for both employees who have just joined the firm and for existing staff on an ongoing basis.

Those involved in AML compliance need the skills and knowledge to fulfil the role, not just by having an understanding of the firm and its clients, but also of the latest anti-money laundering regulations, how to recognise suspicious transactions and how to deal with those suspicions.

New Anti Money Laundering rules: What you need to know is TaxCalc’s new compliance guide, which highlights the many and most recent changes to the AML regulations.