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The anti-money laundering challenge

Claire Bennison
Money laundering is costly, with the National Crime Agency saying at least £90bn in criminal proceeds is believed to be laundered each year in the UK.

A few weeks ago, a new report from HM Treasury stated that the number of professionals, including accountants and lawyers, fined for money laundering in 2016-17, fell 20 per cent to 935 - from a record high of 1,170 in 2015-16.

The accountancy sector saw 23 accountants expelled for money laundering breaches in 2016-17– that’s 0.007 per cent of the profession being ‘struck off’. But that’s still 23 too many.

Money laundering is costly, with the National Crime Agency saying at least £90bn in criminal proceeds is believed to be laundered each year in the UK. Strong supervision is an important deterrent, amongst others such as credible regulation. The new regulatory body for AML, called the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), was launched in January. It’s based within the FCA and works with the 22 UK Anti-Money Laundering (AML) supervisors to help improve standards and with law enforcement to strengthen cooperation. It will work to ensure these 22 organisations – of which ACCA is one - meet the high standards set out in the Money Laundering Regulations 2017.

This linked-up approach is vital to tackle AML. As a member of the UK umbrella body for accountants CCAB, we joined the call for more collaboration in a 2015 report called Coming out of the wash. Smashing money laundering networks needs co-ordination, communication and collaboration – not just in the UK but also across global borders.

Accountants therefore play an important role in tackling money laundering and fraudulent activity. That’s why we recently supported the Home Office’s ‘Flag it Up’ campaign to highlight the threat of money laundering.

Other bodies such as the Law Society, City of London Police, National Crime Agency and HMRC also took part – again highlighting the important need for a joined up and co-ordinated multi-sector approach.

Accountants must be prepared to act as gatekeepers when it comes to tackling financial crime; they need to be aware of the signs to spot possible money laundering, as well as the need to be aware of the laws and regulations that set out their role in combatting it. The Serious Fraud Office has three clear signs to spot for suspicious activity that could be linked to money laundering such as a long term client making requests that are out of character; a client repeatedly asking for services outside your or your firm’s area of expertise; or a client requesting arrangements that do not make commercial sense.

All too often the issue of money laundering is seen as being remote from everyday life. It’s viewed as something that happens in corrupt regimes or in the more shadowy businesses at the fringes of society. But, in truth, it can be very close to home. It may also be viewed as a victimless crime, but it’s far from that. Research, including our own, shows increasingly that corruption hotspots often yield dubious financial activity, which in the simplest terms, often means funding for arms trading, human trafficking and drugs.

What we know from news reports about recent scandals is that fraud and money laundering is infectious – it affects communities, breaks down public trust in legitimate financial systems and can damage the credibility of governments, sporting instructions and big business and the personalities that run it.

Ultimately, the accountancy profession works in the public interest, promoting responsible and ethical business and supporting enhanced global economic performance. As well as a legal responsibility to report money laundering activities, in the long-term ACCA is determined to put our responsibility to public interest first and champion initiatives to tackle it.

And we can’t talk about tackling money laundering without mentioning ethics and professionalism as both play a part in tackling financial crime, with our members having a duty to follow a Code of Ethics and Conduct. The ACCA Rulebook contains the bye-laws, regulations and Code of Ethics and Conduct, which every ACCA member should follow. This involves acting with integrity, objectivity and professional competence, and demonstrating professional behaviour – complying with relevant laws and regulations. For instance, in the coming weeks, there will be a number of changes arising from new AML regulation, that all practitioners must comply with. For instance, under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 all relevant persons acting as Trust or company service providers(TCSPs) must be registered with HM Revenue and Customs (HMRC). As a result of all this change, ACCA’s taken action to ensure all practitioners register with the appropriate authority to comply.

As with any type of criminal activity, the threat is constantly evolving to find new ways to evade detection, demonstrated recently by the utilisation of decentralised crypto currency networks to launder money, often across geographical borders. It goes without saying that professional and regulatory bodies will continue to provide guidelines and red flags for suspicious activity as well as standards and regulation to combat crime.

Alongside this, through the depth of their technical expertise and continued professional development, finance professionals have a personal responsibility to stay up to speed with new threats and join the taskforce. It’s only through collaboration on practical efforts that we can ensure that 23 more accountants make the right call this year.