Concerns have grown that conflicting rules relating to reporting money laundering could cause accountants to be caught between the obligation to report suspicious transactions and the need to avoid inadvertently tipping off clients.
Link: Institute readies members for vigilance
The obligations to report suspect transactions and avoid tipping off are part of the recently enacted Proceeds of Crime Act and have prompted fear among accountants that are subject to the new laws. The Act has faced huge public criticism since it was brought into being.
David Clinker, senior partner at accountancy firm Clinker Little, feels that a real conflict has been built into the new laws. ‘If an audit reveals a suspect transaction that we report to the National Criminal Intelligence Service, do we ignore our concerns in the audit report to avoid tipping-off?’ he said.
Clinker is worried that not noting a suspect transaction in an audit will fall foul of professional standards and could provoke the institute’s disciplinary body, the Joint Monitoring Unit, into action.
Felicity Banks, head of business law at the ICAEW, agreed, saying that criminal and accountancy laws are inconsistent. She warned this is a ‘tricky area of law’ that needs care.
‘Accountants can approach it by delaying their report where it is practical.
But continued delay can also tip off. In that case, they need to discuss the case with NCIS and reach a compromise.
‘If that fails, they need a court order,’ said Banks.