Category: Anti-Money Laundering

Combatting Money Laundering – Part 2

Dishing the Dirt

By: Alex Byrne – 22 January 2019

KEY POINTS

  • Tax practitioners should take care to ensure that clients are not tipped off about money laundering reports.
  • Understanding when a suspicious activity report should be made.
  • The difference between internal and external reports.
  • There are limited exemptions from making reports.
  • Advisers should take care not to risk their businesses by falling foul of the anti-money laundering legislation.

In the first part of this article (‘A dirty business’, Taxation, 29 November 2018), we considered the basic principles of the anti-money laundering (AML) regulations and recognising the circumstances that might indicate suspicious activity. In this issue we will consider ‘tipping off’, reports and exemptions.

Accountancy and tax practice staff must be properly trained on tipping off, which is covered in paragraph 6.1.20 of the CCAB’s Anti-Money Laundering Guidance for the Accountancy Sector. Similar paragraph references in this article refer to this guidance.

The offence of tipping off is committed when a relevant employee in the regulated sector discloses that a suspicious activity report (SAR) has been made and this disclosure is likely to prejudice any subsequent, current or contemplated investigation into allegations of money laundering or terrorist financing (MLTF).

There are some exceptions at paragraph 6.1.23 of the CCAB guidance.

  • A person does not commit an offence, for example, if they make a disclosure to a fellow employee of the same undertaking.
  • Nor is an offence committed if:
  • a relevant professional adviser makes a disclosure to another within the same profession (for example, accountancy) but from a different firm, who is of the same professional standing, when that disclosure relates to a single client or former client of both advisers and is made only to prevent a money laundering offence; and
  • is made to a person in an EU member state or a state imposing equivalent anti-money laundering requirements.
  • No disclosure offence is committed if an adviser attempts to dissuade their client from conduct amounting to an offence. And no offence is committed when enquiries are made of a client regarding something that properly falls within the normal scope of the engagement or relationship. This might be to understand a specific transaction or even, for example, to ask about an invoice that does not appear to have been included on a client’s tax return.
  • Individuals concerned about tipping off may wish to consult their money laundering reporting officer (MLRO). It is important that documents containing references to the subject matter of any AML report are not released to third parties without first consulting the officer.

The AML guidance advises that MLROs may seek advice from a suitably skilled and knowledgeable professional legal adviser or from the helplines and support services provided by the professional bodies (paragraph 6.1.29). A discussion with the National Crime Agency (NCA) and law enforcement may also be valuable, but the guidance warns that they cannot provide advice and are not entitled to dictate the conduct of a professional relationship. Continue reading...

Combatting Money Laundering – Part 1

By: Alex Byrne – 27 November 2018

Alex Byrne sets out the ways practitioners can protect themselves from the charge of money laundering and looks at published guidance.

KEY POINTS

  • Why is money laundering so important to accountants?
  • The application of the rules and examples of money laundering activities.
  • Avoiding committing a money laundering offence
  • The ‘Flag it up’ campaign and signs of money laundering.
  • Risk assessment, potential tax fraud and deciding whether to report.

A dirty business

As the government relaunches its ‘Flag it up’ campaign against money laundering activity, Alex Byrne considers the important role played by accountants and tax advisers in combating the practice.

The Consultative Committee of Accountancy Bodies (CCAB) is the umbrella group of various chartered accountancy bodies: the ICAEW, ACCA, CIPFA, ICAS and Chartered Accountants Ireland. In March 2018, it published a new document, Anti-Money Laundering Guidance for the Accountancy Sector. My initial reaction was surely we did not really need a 73-page document that is not legislation and does not spell out the things to look for. Most accountants seek practical guidance on anti-money laundering, especially something they can pass on to staff to strike a balance between, at one extreme, failing to carry out the requisite procedures and, at the other, swamping the firm’s money laundering reporting officer (MLRO). However, on rereading, the guidance improves with familiarity.

Familiarity, not contempt

The anti-money laundering (AML) guidance has legal status, so accountants remaining unfamiliar with it or not applying its provisions do so at their peril. The regulations apply, with some exceptions, ‘to the persons (“relevant persons”) acting in the course of business carried on by them in the UK’. This includes (reg 8(2)(c)) auditors, insolvency practitioners, external accountants and tax advisers and (reg 8(2)(e)) trust or company service providers and company services in the UK, other than under a contract of employment. Continue reading...

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