AML regulations: checks balanced

Accountants in public practice will have to wait another six months before
the new regulations on money laundering take effect. While the new rules will
not have as far-reaching an impact on the activities of practitioners as those
that came into force in 2004, they do involve some significant fine-tuning.

No change will be made to reporting obligations, but due diligence checks
will become an on-going obligation and there will be new responsibilities for
practitioners to be alert to the motives of high-ranking foreign politicians who
seek their advice.

There is, however, a potentially significant measure concerning how
anti-money laundering (AML) measures are supposed to be policed. As is the case
with the current regulations, the new rules will apply to all those who provide
accountancy services to the public by way of business. This means that the rules
will apply, not only to members of ACCA and the Institutes of Chartered
Accountants, but to anyone else who offers accountancy services to the public,
regardless of their qualifications or even lack of them.

As it stands, there are no standard arrangements for the monitoring and
enforcement of compliance. The main bodies routinely check members’ AML
compliance as part of their statutory and non-statutory regulatory procedures.
But such checks are unlikely to be the norm.

This will change. From December, all practising accountants will have to be
supervised for their ongoing compliance with their AML responsibilities. The
leading bodies will be allowed to monitor the compliance of their own members,
but members of unrecognised bodies will have to register – and pay a fee for the
privilege ­ with HMRC. The same will apply to accountants who are not members of
any particular body. Failure to register will be a criminal offence.

Those accountants who have complained in recent years about all the costs
they have had to bear to become compliant in this area may still be sceptical
about whether all their efforts really are achieving much in the way of
deterring and investigating serious criminal activity. But at least now they
have the satisfaction of knowing that all the accountants who are competing with
them for business are ­ or should be ­ setting up the same systems and bearing
the same costs.

Knowing the identity of an accountant’s AML supervisory body should also in
future become a key check for prospective clients.

John Davies is head of business law at ACCA

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