How technology can help with the AML crackdown

With the UK government tightening its focus and introducing new anti-money laundering (AML) laws, industries are having to make great strides in protecting themselves and their customers from fraudulent activity.

The Office for Professional Body Anti-Money Laundering (OPBAS) has asked every industry to crack down and accountancy is no exception. For accountants the Consultative Committee of Accountancy Bodies (CCAB) has provided guidance for all accounting bodies and the risks are becoming greater for not complying.

Fines are becoming more commonplace across all industries – gambling, in particular, has seen hefty penalties handed out, like the £19m fine given to William Hill recently. Accounting has also seen the screw turned, with a recent example seeing an unfortunate Institute of Chartered Accountants in England and Wales (ICAEW) member fined close to £24,000 for failing to provide enough evidence to demonstrate compliance with AML procedures. His reason for doing so? Feeling overwhelmed by the process.

This is a common feeling in the accounting world. The CCAB guide, while comprehensive, is a weighty, jargon-filled tome that can be a little overwhelming in breadth and has not yet been translated into simple, practical guidance for accountants to apply day to day in the office. By way of comparison, legal firms have this from the Council for Licensed Conveyancers (CLC).

Do the right checks

So how do busy accountants do the right checks to understand their clients’ businesses?

Technologies are available to address accountants’ regulatory obligations, bringing simple digital processes to these tasks such as electronic identification and verification (eID&V) replacing photocopies of passports and Open Banking-enabled AML tools that can establish the source of funds, as well as providing the necessary insights to a client’s financial behaviour.

Some accountants are already getting financial insight reports with transaction breakdowns, regular and one-off incomings and outgoings, account balance overviews, cash transactions, other account analysis and more, which together can provide the tools to assess whether what you’re being told match the evidence you have about the client or business.

It’s a level of detail and insight far greater than paper bank statements or the simple (but still useful) bank feeds from cloud-based accounting software – the sort of detail necessary to effectively meet the Client Due Diligence and AML regulations.

“I’ve found using financial risk reports very useful in addressing my onboarding CCAB guideline-based requirements,” said Johann Goree, group managing director of OnPoint Accounting. “Not only am I able to quickly assess a client for the risks of financial crime but I am gaining valuable insights into the business and evidence that the business matches the description given.

“There’s an added benefit of having access to two years’ data to check against QuickBooks Online and so on. This puts my mind at rest that we are doing everything possible to maintain high vigilance for financial crime while also delivering valuable insights at the start of our working relationship with the client.”

Understanding your clients

This sort of technology and process is more accessible than many accountants realise, and situations like the fine above needn’t happen. Going beyond knowing your client to truly understanding them is now easier than ever before, with greater financial insights on hand to address the ever-growing AML and due diligence questions. Tools to know where a client’s income derives from, and to streamline risk management processes are here.

These are tools that are already proving effective in the legal, gambling and financial services industries and accountants are some of the professionals best placed to spot money laundering and financial crime. Technology is providing the solutions to help accountants understand their clients and navigate the more heavily regulated future.