Anti-money laundering software: What accountants should look for
With regulators ratcheting up fines and a tougher regime coming down the tracks, the accountancy profession is feeling the anti-money laundering strain. Can software do some of the heavy lifting, and what should accountants be aware of when choosing tools to help remain compliant?
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“Each accountancy firm is unique – not least because the partners in it have unique experience, knowledge and interests,” said Winch. “In my opinion, each firm’s AML compliance also needs to be unique.”
It's an interesting point, but the degree of practicality will depend on the seriousness with which the particular practice treats the topic.
You could say the same about learning to drive a car ... for instance (many moons ago) I taught my wife how to pass her driving-test (mind-numbing repetitions of uphill starts, reversing around corners and so on - all at locations rigorously plotted out on a map of the area within a 1/2 mile radius of the test centre).
Once accomplished, she could then focus on improving driving skills (awareness, tricky conditions, other drivers, etc).
Of course some people appear not to bother with the 2nd stage.
And that's the inherent problem with all systems that attempt to define standards and measure compliance ... as an 'inspector' for BSI once said to me, "Your QS manual should document the standards you commonly achieve - not those to which you merely aspire"!
The real question with AML is ... how many practices really believe in its effectiveness (and therefore do or do not see it as a priority for their clients - as opposed to a box-ticking exercise)?
The problem with standardisation is just that. We are a diverse society that needs diversity not straight bananas. Why do you think we voted to come out of the EU (here we go again)? Yes there should be checks, but what we got at the moment isn't working as the scammers are getting away with it all the time. Stop the scammers and I would be more inclined to believe compliance works.
This article has just kindled my first real thought of retirement. There is only so much straw that can be piled on the camel's back.
UK government to crack down on money laundering.
Does that mean appointing additional Police officers to crack down on folk who launder money from crime like drug cartels etc.
Or simply tighten up the rules to make it easier fine those bound by AML rules and increase the global take on penalties above the £4.8bn it currently gets from those that fall foul on their paperwork but dont actually contribute to money laundering.
I would love to know the stats between how many accountants/lawyers etc who have been prosecuted for AML breaches against how many criminals the AML rules have aided in catching.
I am thinking seriously about retiring, not least because of the posts of other accountants warning about their dreadful compliance visits recently.
I think buying software for AML would be overkill for me when I've got less than 25 clients.
However, as others have said, lots of time needs to be spent on keeping AML documentation up to date - just to prove that I can document things.
I think others before me have said that sole practitioners are going to find it increasingly difficult to manage the AML requirements on their own, and in 10 years' time there won't be many of us left because of that.
To the best of my knowledge, not one of the SARs I have submitted have resulted in any action being taken at all. The relevant subjects appear to unaffected and all that happens is that I've ticked a box for the ACCA to decide not to fine me.
Let's not pretend that the risk rating is down to each "unique" practitioner's opinion - it's the opinion of the ACCA or ICAEW overlord tasked with inspecting your firm. I was told what the risk rating was for my clients - I disagreed strongly with it but my choice is to accept their opinion, or be fined. I have been told to reassess all of my clients up to medium/high risk.
Instead, the way it should be is that you demonstrate the rationale behind your opinion and if reasonable, that's OK.
Having to consider disengaging from Mabel, an 87 year old retiree who supplied a passport and POA ten years ago but now doesn't have a valid passport, is absurd and helps no-one. I don't care what you say, she is a LOW RISK AML client.
Frankly, I am sick and tired of people from my professional body, who mostly have no real world experience, coming in with the sword of Damocles and threat of fines and bluster each time. I have already stopped accepting Audit work because of the ridiculously over-zealous approach of the monitoring unit, and I'm already actively considering selling up.
I love the work but am 75 next year and seriously considering packing up. Yet don't Government want older workers? Maybe I'll run for Mayor somewhere.
I read through the CCAB rules yesterday (again) and they specifically said it's our opinion about risk, but as you say, heaven help you if your prof body say otherwise (often with no clear reason and no knowledge of our client)
I feel we have to be continually monitoring posts on Aweb to discover what the prof bodies are concerned about so we can pass our own inspections.
A word about 'low risk Mabel'.
The potential problem with assessing Mabel as 'low-risk' is that your regulator (and this seems to depend upon which regulatory body it is) may take the line that Mabel cannot be 'low-risk' because she is not a government body or a quoted company. (Presumably those bodies are regarded as low risk because they have internal auditors and reams of policies and procedures - but let's not go there!)
The thing about these large 'low-risk' clients is that, for example, inspecting the passport of the chief executive is not going to do anything of any practical use in relation to the money laundering risk associated with that client. So for those low-risk clients a different approach to AML is called for (quite sensibly IMHO).
But checking Mabel's passport / utility bill / free bus pass actually does assist you to verify her ID. If you classify Mabel as medium risk you will check her ID. In truth you will probably do some work in checking her ID anyway (even if you have categorised her as low-risk). So the practitioner's categorising of Mabel as low-risk may have no practical significance whatsoever - but might cause problems with your regulator.
For that reason I would categorise Mabel as 'medium/normal-risk' (unless she has a side-line in selling on her meds!).
David
David you have well and truly fallen into the trap. "but might cause problems with your regulator".
David, how can regulators assess our clients when they don't know them, or is it just the "normal" one box fits all. Treat everybody as suspects until they prove otherwise.
Not a very good way to go methinks.
Hi John
The problem is that the regulator is not attempting to assess your clients - he is attempting to assess you!
If you report that the majority of your clients are low-risk and you have made no SARs the regulator might think, 'Oh great, there are no money laundering problems here'. But he alternatively might think, 'I wonder if this accountant is knowledgeable about money laundering risk?'.
I just don't see the need to take that chance!
David
David, they've got you hook line and sinker and that is the problem with our PB's.
HMRC are regulators but they want to control and over the years they have got away with it. IR35? what nonsense is that? Control of employment status by HMRC. If that's the way that the powers that be want to go, then so be it. Stagnation will be the order of the day. Oh wait a bit, haven't we already got that?
Back to the plot. Sorry David, but the regulator is attempting to assess our clients through us. Come on David, I would say 80% of all clients are low risk even if they may be in what the regulators construe as a high risk business.
Same old same old, sledge hammer to crack a nut.