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How technology can help with the AML crackdown


With the government and professional bodies turning the screw on anti-money laundering and client due diligence, technology is evolving to provide solutions that not only help accountants navigate a more heavily regulated future but also provide greater financial insights.

7th Jun 2023
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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.

Replies (4)

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By johnjenkins
08th Jun 2023 11:44

Now, Aweb, to avoid confusion this post is not in any way detrimental to Tony Walker.
When I read "how technology can help" in any thing to do with Accountancy I cringe. Technology can never take the place or even help spotting a "wrong un". This comes with experience of dealing with people and knowing their business.
On a more general note AI is beginning to be looked at with suspicion, and rightly so.
It really is time that we had a period of consolidation before we leave everybody behind, not just the elderly.

Thanks (2)
Replying to johnjenkins:
Tom Herbert
By Tom Herbert
08th Jun 2023 14:15

To be fair to Tony, he wrote the article and I put together the headline and standfirst (the paragraph at the top). Am happy to admit when I've got something wrong - will try and avoid the 'H' work in future!

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Replying to johnjenkins:
By Hugo Fair
08th Jun 2023 14:23

I don't fully trust technology - or to be precise I don't possess the uncritical reliance on it that so many appear to have.
But the weaknesses in the 'systems' are always more fundamental ... at the level of the system that has been automated and/or the people required to work with it.

I've just had lunch with an uber-rich acquaintance, who was regaling me with his ludicrous experience earlier in the day.
- he was passing through London on one of his rare visits to these shores and decided to visit one of the (private) establishments with which he banks;
- all he wanted to do was pick up a physical card (and collection had been agreed in advance);
- he was instantly recognised (as a valued customer of 50+ years) and so, after the pleasantries of coffee etc, they confirmed that they knew him to be who he was ... and moved on to the dreaded list of check-boxes demanded by the system (as a prelude to handing over the card);
- at which point they discovered that they couldn't tick one box (comparison of provided signature with the one on central records) for the simple reason that they'd lost the central copy sometime in the past - and everything halted!

It took 15 minutes before the otherwise obsequious flunkies would accept there was only one logical way forward that would 'beat the system' ... so:
* new signature taken and quickly uploaded to central records;
* after another quick coffee now compare the new signature with what's just been uploaded (i.e. the same signature) - and confirm that surprisingly they look the same!
* check-box can then be ticked and card handed over.

Whatever idiotic variant of KYC the system was demanding, it took a human to do something that (however pointless in itself) 'defeated' the technology.

Thanks (1)
Replying to Hugo Fair:
By johnjenkins
08th Jun 2023 14:45

I take your point, but isn't what has happened exactly why these boxes have to be ticked (when you have such a system in place). What's the point of having a system to stop fraud when the system itself lends it to fraud when something doesn't work.

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