Firms may lose clients to MLR
Small accountancy firms could find it impossible to deal with incoming money laundering rules (MLR) because of the huge costs in compliance.
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Besides the immediate costs of adhering to the new rules, the biggest financial burden on firms is lost income, as companies, worried about accountants’ prying eyes, use less inquisitive advisers instead.
David Cafferty of Carter Backer Winter, who is chairman of CIMA’s fraud risk management group, said that potentially, the biggest cost to firms could be in lost business, because new clients will begin to shop around for accountants and advisers that are not complying with MLR.
‘A number of accountants are just going to ignore it,’ he said. ‘They will just perceive it as another government initiative that will simply fade away.’
He added that accountancy firms could also lose clients to lawyers and non-qualified accountants, who do not have to report suspicious transactions and are not subject to the same regulations.
Other costs associated with MLR are requirements that firms keep hard copies of client documents, train staff to comply with the measures and name money laundering officers to produce suspicious activity reports.
Training, for instance, can cost £75 per employee. CD-based training can cost up to £7,000 for 100 people.