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Capium offers service to ease new AML regulations

Capium has released an electronic anti-money laundering (AML) client verification service in conjunction with compliance platform Veriphy.

20th Aug 2020
Staff Writer AccountingWEB
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Following changes to the money laundering regulations that came into force earlier this year, cloud practice software developer Capium has created a product to reduce the added strain on accountants.

Despite the onset of Covid-19, the Financial Reporting Council was determined to reinforce AML compliance in the UK. The January rule changes incorporate international standards set by the Financial Action Task Force (FATF) and transpose the EU’s fifth money laundering directive (5MLD) into domestic law.

Under the revised regulations, accountants must now undertake due diligence on clients not previously covered by AML legislation. Additional checks must also be conducted to verify the identities of clients from certain high-risk countries.

Capium AML compliance module

Provided by compliance software Veriphy, Capium’s new AML product offers identity verification and record-keeping alongside its existing compliance capabilities.

“As a business, we actively hunt for high compliance partners who complement our core offer of cloud-based full suite practice software,” said Capium operations and partnerships manager, Nick Cheyne. “With the rapid transition to remote working, Capium recognises accountants need to ensure they can demonstrate compliance to AML regulations now more than ever – onboard new clients, systemise your process, store the data and be sure that you are compliant with the newest AML regulations.” 

In addition to the built-in integration, Capium said its AML module achieves a 90% success rate in comparison to the 78-80% average of rival services. There are no up-front costs for the service, which is priced at £3 per chec,.

“We don’t believe the costs of changes to the law should be passed on to accountants, or that compliance should cost the earth,” said Capium director Tushir Patel. “If your accountancy practice is already powered by Capium, it’s simply a matter of setting up our anti-money laundering add-on and you’re good to go.”

Key changes with 5MLD

According to Capium, the UK Government went above and beyond the requirements of the EU directive, extending UK AML legislation to cover a broad range of ‘crypto-activities’. The key changes for accountants include:

  • When taking on a client, a limited company or limited liability partnership (LLP), accountants must confirm that information on members with significant control has been recorded with Companies House, and report any red flags.
  • When involved in a transaction, in which either party is based in a high-risk nation or where the transaction is complex or unusually large, enhanced due diligence must be carried out. This means extra checks with thorough records in case an investigation is triggered.
  • Additional risk criteria have been clarified. For example, “golden visa” applicants or any client who won’t or can’t meet face-to-face and can’t provide electronic proof of identity must be particularly scrutinised.
  • Growing emphasis on electronic identity verification. Though the guidance remains vague, the indications are that secure eID techniques will become compulsory in coming years.

ICAEW 2020 AML insights

To provide a bit of context to the growing market for automated AML tools like Capium’s, the ICAEW carried out 1,725 reviews during 2019 and the institute’s subsequent 2020 anti-money laundering monitoring report highlighted the most common mistakes in AML compliance:

  1. Firm-wide risk assessments
  2. Updating Customer Due Diligence (CDD)
  3. Risk assessing clients
  4. Criminal record checks on Beneficial Owners Officers and Managers (BOOMs)
  5. Review of policies, controls and procedures
  6. Training
  7. CDD on new clients.

High-risk firms are visited every two years, and for other firms, the frequency of visits will vary depending on risk. The report showed no breaches occurred in the case of 309 of firms (18%), insignificant breaches in 1,139 (66%) of firms and more significant breaches which required either follow up action or referral to the Practice Assurance Committee (PAC) at 277 (16%) of firms. In 82% of firms, a minor breach was identified, but in only 8.6% of cases was a referral made to the PAC. Fines were issued to just 38 firms, totalling £90,350.

The ICAEW’s anti-money laundering advice service handled more than 1,500 calls and webchats from members about the anti-money laundering/terriorst finance responsibilities. As well as a hefty online libary of guidance, the institute also has an AML InfoBot (an artificial intelligence powered webchat) to answer common questions.

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