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FAB: Accountants consider AML charges to ease burden

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The burdens of anti-money laundering compliance continue to frustrate accountants and bookkeepers, but as discussed at day one of the Festival of Accounting & Bookkeeping, the solution could be to charge clients. 

13th Mar 2024
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Anti-money laundering compliance (AML) was the talk of the Festival of Accounting & Bookkeeping at the NEC, Birmingham. With accountants and bookkeepers feeling increased scrutiny from their professional bodies, and the government looking at beefing up the money-laundering regulations and supervision, a lot of attendees were looking for ways to easily manage the increasingly burdensome task. 

There were a number of sessions dedicated to addressing some of the common AML concerns, along with vendors on the showfloor like Bright, Capium, Firmcheck, TaxCalc, Wolters Kluwer and Sage offering AML onboarding solutions. 

However, one debate that continued across many of these sessions was whether charging for the admin of AML is the solution to managing the slog of compliance. 

Don’t see AML as a tick-box exercise

Rebecca Williams from Eccounting Made Easy set the mood early in the day to approach AML in a proactive manner. In her session, “How I learned to love AML”, Williams advised attendees to look at AML as an opportunity and not to see it as a “tick-box exercise”. 

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Replies (24)

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stonks
By WinterDragon
13th Mar 2024 22:27

It was a great panel, and I can confirm David is just as wise and charming in person as is he is on the forum.

I would add some interesting context on the point about charging for AML. The audience mostly comprised of sole-practitioners and partners of small firms and we were asked if any of us were currently charging for AML and only one person (out of a full crowd) put their hand up.

Rebecca made a good point about Solicitor's itemising this charge and ensuring that we seek recompense to ensure we dedicate enough time to do a proper job. However, I'd argue for us sole practitioners/small firms we already factor in our time costs for doing AML/KYC within the fees that we quote. I don't necessarily want my clients to see full itemisation of all the things that we do as they'll get scared that I'll start billing them for shredding costs or moving my pen across my desk!

Thanks (2)
Replying to WinterDragon:
David Winch
By David Winch
14th Mar 2024 04:00

Ha, ha! "Wise and charming" - I'll take that!
More seriously, you may have noticed that in answer to the first question from the floor (about expired ID documents) Rebecca gave a firm & reasoned "Yes" and then I gave a firm and reasoned "No".
That highlights one of the problems with AML compliance. Neither of us was wrong and we agreed that the best answer was 'check with your supervisory body'. But does that make your life easier?
David

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Replying to WinterDragon:
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By johnthegood
19th Mar 2024 10:17

WinterDragon wrote:

Rebecca made a good point about Solicitor's itemising this charge

terrible idea, from my many successful years in business I can tell you that no one at all is interested in how much it costs you and all the difficulties you may have making the sausage, and they really really do not want to know what is in the Sausage, the only thing they want to know is does it look good, taste good and most importantly how much its going to cost them.

Thanks (2)
Replying to johnthegood:
stonks
By WinterDragon
19th Mar 2024 11:13

I tried to add to the discussion from both sides and I agree with you that most punters aren't interested in what's in the sausage but I have pushed to itemise more of our invoices to the key elements - especially when there are several services that fall within an annual invoice. It helps to be prepared if/when challenged on fees by clients to look at the invoice and say 'which services don't you need' rather than 'where can I (as the accountant) cut my prices'. It throws the ball back for them to decide actually they can do the confirmation statement themselves or can do more of the bookkeeping.

And as for whether an AML check falls into an internal price list to help quote for jobs is a separate topic. Many sole practitioners on here are skilled at looking at a job and being quick to work out what they will charge however any practice owner with an appetite for growth can't expect new staff to absorb a pricing structure by osmosis. Having robust systems and fancy flowcharts can ensure you are consistent as a practice rather than the quote depending on how good of a morning the partner has had and a finger in the air.

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By GHarr497688
14th Mar 2024 15:39

On average I would say AML process at the outset costs me in chargeable time around £150 and then each year to re-assess around £50. I explain to clients what I need to do each year and they are happy to pay for the time this takes. This way I ring fence income and costs. I am now retired.

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Replying to GHarr497688:
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By Roland195
14th Mar 2024 19:26

You lost me at happy to pay.

Thanks (3)
Replying to GHarr497688:
stonks
By WinterDragon
19th Mar 2024 11:16

At the risk of upsetting you, I've dug out the invoice from my solicitor from a personal property purchase last year and seen they included £20(+VAT) for a 'Money Laundering ID Check' for both my partner and I.

They also charged me £95 for a SDLT return that they insisted I wouldn't be able to fill in myself despite no Stamp Duty being due on the purchase as FTBs!

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Replying to WinterDragon:
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By johnthegood
19th Mar 2024 12:45

WinterDragon wrote:

At the risk of upsetting you, I've dug out the invoice from my solicitor from a personal property purchase last year and seen they included £20(+VAT) for a 'Money Laundering ID Check' for both my partner and I.

They also charged me £95 for a SDLT return that they insisted I wouldn't be able to fill in myself despite no Stamp Duty being due on the purchase as FTBs!

Well, I for one do NOT wish to follow the pricing or invoicing model of a lawyer!

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the sea otter
By memyself-eye
14th Mar 2024 18:32

So (when was in practice) I was expected to say to clients I had known for 10, 20, 30 years "I need to charge you for verifying who you are?"
That will be £X please.
Sometimes I wonder what planet some accountancy folk are on.......

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Replying to memyself-eye:
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By Roland195
14th Mar 2024 19:28

The same planet they spend every Friday doing it apparently, updating the files for expired Driver's Licences and checking the client hasn't been added to a PEP register.

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By JD
19th Mar 2024 09:44

In what way does charging more reduce the AML burden or is acting in the best interest of our clients, who can no longer afford the cost. Without doubt, following any approach that the legal profession takes is the opposite of what accountants should be aiming for.

Over regulation and increasing the cost to the user of any service can never lead to a good outcome for anybody.

Thanks (8)
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By johnjenkins
19th Mar 2024 09:58

So the itemised bill shows "added value" for AML?

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Mike Grant
By Michael_R_Grant
19th Mar 2024 10:03

It's an interesting idea, but unless it becomes standard across the industry I can't see clients being happy (or even often willing) to pay for AML checks.

Thanks (3)
Replying to Michael_R_Grant:
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By ArianBloodwood
19th Mar 2024 10:47

I billed for AML checks right from the get-go, and my clients are certainly willing to pay for it. Many are not happy about it, but then they are equally as unhappy about paying anything just to safely navigate our ridiculously complex tax system so they can do what they want to do - which is pay their tax.

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By johnjenkins
19th Mar 2024 10:17

All this charging for AML, MTD etc. is going to push the one man band into "finding" someone to do their return, maybe not as competent as we would do it. The bottom line will be a loss of revenue for HMRC and guess what, more regulation.
My view is that we are on the other side of the "Laffer curve" and stagnation is here (they call it recession), whatever the GE brings.

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Replying to johnjenkins:
All Paul Accountants in Leeds
By paulinleeds
19th Mar 2024 16:43

In the old days, we spent minutes doing AML, if any. Now it takes hours. Even asking for new up to date documents can take minimum 30 minutes, with chasing & follow up, it increases my time.

I've prepared standard email text to request AML documents. Despite all the emphasis in bold, colour, underlining etc, I still get too many clients sending me part of what I need, sending general letters to prove address, photocopies of the top of bank statements and bills, so that I cannot see the detailed transactions, without the sight of the full original document.

You may 'know your client', but unless you spend all the time documenting it, you are not compliant, and today that it what counts for the regulators. If I prepare my best friend's / partner's annual Ltd Accounts. I know them better than all my clients, but I still have to do a risk assessment and document it all. Time = £ charged.

As times goes by, I believe more and more that we have to charge for AML, either as a separate fee or just increase the whole annual accounts / tax return fee.

I don't like padding out fees, I'd rather show a cost of something done so clients understand the cost of all parts of my work. I think it's easier to justify a £3,000 fee charge to a client with several component charges e.g. £150 Co Sec, £150 AML, £500 CT, £1,000 recordkeeping & £1,200 annual account.

With small jobs, an AML annual fee of say £150 becomes a larger percentage compared to a larger annual account fee and we can lose hours of chargeable time.

I've just spent almost two weeks creating 'know your client' documents for Tax Return clients and chasing up passports / address documents. Even at £100 ph, 1 hour per tax return clients and 100 clients, that's 100 hours (2 weeks of time).

Even a small firm, with 100 clients at £100 AML fee, will generate £10,000. I cannot afford to write off 100 hours to office admin, and in practice, it can be 200 hours i.e. 2 hours pa on average on AML.

Clients may not be interested in why their sausage now comes with special packaging, instructions how to cook it, a leaflet telling them what's in it, but if regulations state that all this rubbish is required then the price of your sausage has to go up, and showing the reason on the invoice, to me, is not a problem.

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Replying to paulinleeds:
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By johnjenkins
19th Mar 2024 16:47

The thing is the clients do not fully understand what we have to have, so more regulation means more not understanding why we need to have certain documents etc. It's all going to come crashing down.

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By MartinJG
19th Mar 2024 10:37

I dealt with my AML renewal and paid the fee on the same day I received the reminder. I have just received another reminder 14 days later asking me to complete my return and make a payment. I replied immediately and sent them a copy of the submission details. I have now received a 'Delivery Status Notification' reply by email. Since it is impossible to contact them by telephone, given the perceived importance of AML and the stringent compliance requirements, it does beg more than a few questions about what we are dealing with behind these closed doors.

Thanks (1)
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By MartinJG
19th Mar 2024 10:37

I dealt with my AML renewal and paid the fee on the same day I received the reminder. I have just received another reminder 14 days later asking me to complete my return and make a payment. I replied immediately and sent them a copy of the submission details. I have now received a 'Delivery Status Notification' reply by email. Since it is impossible to contact them by telephone, given the perceived importance of AML and the stringent compliance requirements, it does beg more than a few questions about what we are dealing with behind these closed doors.

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By agknight
19th Mar 2024 12:34

What we charge and how we present a charge is a commercial decision. He who is weakest and richest will suffer the cost.

Quite perverse holding up the example of solicitors as the way to go!

Much better would be our professional bodies fighting the bureaucracy rather than tick boxing along with it.

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By PAULLEWISFCCA
19th Mar 2024 12:43

money laundering - are the banks still allowed to create debt from signatures and is the bankrupt of england still allowed to suspend payments in specie and create as much 'money' as needed for the governments pet projects

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By Mr J Andrews
19th Mar 2024 13:01

A 'Solution' is a means of solving a problem or dealing with a difficult situation. So it's correct that this failed Government's vision of beefing up AML regulations and supervision was regarded as a problem at the Festival.
The other [liquid ] definition of 'Solution' is a mixture in which the minor component is uniformly distributed with the major component. The services and clientel of small practices / sole practitioners are obviously worlds apart from what goes on within major firms; tarring each with the same brush is totally impractical.
There's no mention as to whether this increasingly burdensome task should simply be accepted or perhaps subject to a re-think . But no surprise to see some software vendiors on standby at the Festival offering ''Solutions''...................

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By Ian McTernan CTA
19th Mar 2024 14:40

That is not a solution, it's passing on the problem that AML is, with all the added costs for zero benefit at all.

A cheaper solution would be to employ more people actually lookijng into money laundering to catch the real money launderers rather than force everyone to spend billions in pointless paper chases.

Thanks (1)
Replying to Ian McTernan CTA:
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By PAULLEWISFCCA
19th Mar 2024 16:38

the big 'money' launderers are the banks and the central banks

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