CCAB issues draft anti-money laundering guidance for accountants

CCAB has issued draft guidance on anti-money laundering for all entities providing audit, accountancy, tax advisory, insolvency or related services, including trusts and company services, pending final Treasury approval, to comply with new rules effective from 26 June

The 73-page draft guidance has been updated to comply with the latest Money Laundering Regulations 2017, which came into force on 26 June 2017. The draft has been sent to the Treasury for approval but this is not due until later this year.

The guidance has been prepared to help accountants (including tax advisers and insolvency practitioners) comply with their obligations under UK legislation to prevent, recognise and report money laundering. Compliance with it will ensure compliance with the relevant legislation (including that related to counter terrorist financing) and professional requirements.

The UK anti-money laundering (AML) regime applies only to defined services carried out by designated businesses. This guidance assumes that many businesses will find it easier to apply certain AML processes and procedures to all of their services, but this is a decision for the business itself. It can be unnecessarily costly to apply anti-money laundering provisions to services that do not fall within the AML regime.

CCAB advises accountants to watch out for key customer risk factors, including whether:

(i) the business relationship is conducted in unusual circumstances;

(ii) the customer is resident in a non-UK jurisdiction geographical area considered to be an area of high risk;

(iii) the customer is a legal person or arrangement that is a vehicle for holding personal assets;

(iv) the customer is a company that has nominee shareholders or shares in bearer form; 

(v) the customer is a business that is cash intensive; and

(vi) the corporate structure of the customer is unusual or excessively complex given the nature of the company’s business.

It applies to businesses and individuals who fall within the provisions of the UK anti-money laundering regime because they are part of the regulated sector (the term ‘regulated sector’ used by Sch 9, Proceeds of Crime Act 2002 (POCA) is identical in scope to the ‘relevant persons’ referred to in reg 3 of the 2017 Regulations.)

Someone commits a money laundering offence if they:

  • conceal, disguise, convert or transfer criminal property;
  • enter into, or become involved in, an arrangement which they know or suspect facilitates money laundering; or
  • acquire, use or possess criminal property for which adequate consideration was not provided.

Any of these offences is punishable by up to 14 years’ imprisonment and/or an unlimited fine.

None of these offences is committed if:

  • the persons involved did not know or suspect that they were dealing with the proceeds of crime; or
  • a report of the suspicious activity is made promptly to: (a) a money laundering reporting officer (MLRO) (ie, an internal report); or (b) the National Crime Agency (NCA) under the provisions of s338 of POCA (as a suspicious activity report, or suspicious activity report (SAR)) and the report is made before the offence takes place so that the necessary consent to proceed (referred to as a defence against money laundering by NCA) is obtained beforehand; or
  • there is a reasonable excuse for not reporting (this is likely to be defined narrowly, in terms of personal safety or security, and so very rare); or
  • the conduct which gave rise to the criminal property is, (a) reasonably believed to have happened in a location where it was legal (ie, outside the UK), and (b) would have carried a maximum sentence of less than 12 months had it occurred in the UK. The requirements of this overseas conduct exception are complex, onerous and stringent; specialist legal advice may be needed.

All MLROs, deputies and delegates should undertake continuing professional development (CPD) appropriate to their roles.

In addition to training, businesses are encouraged to carry out periodic AML awareness campaigns to keep staff alert to individual and firm-wide responsibilities.

In the case of sole practitioners, CCAB says: ‘Because it would not be appropriate to the size and nature of the business, a sole practitioner who has no ‘relevant employees’ need not:

  • appoint a board member to be responsible for the business’ compliance with the AML regime, as the sole practitioner will be held responsible;
  • appoint a ‘nominated officer’ because the sole practitioner will be responsible for submitting external reports to the NCA.

Julia Penny, divisional director, technical, at SWAT UK said: ‘While the basic principles of customer due diligence (CDD) have not changed, once again there is quite a bit of alteration in the detailed requirements. This includes specific situations in which enhanced due diligence (EDD) is required and some alteration to the basic information required for corporates.

‘The definition of politically exposed persons (or PEPs) was extended to include UK PEPs as well as foreign nationals in the new Regulations, therefore requiring EDD. There are also some changes to who is classed as a beneficial owner, particularly for trusts, where the settlor would now be included.’

Draft tax and insolvency appendices will be published shortly.

Draft CCAB Anti-Money Laundering Guidance for the Accountancy Sector

Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

Comments can be sent to admin@ccab.org.uk

Members of CCAB include ICAEW, ICAS, ACCA, ICAS, CAI and CIPFA.

Report by Sara White

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