Beware of short-cuts to anti-money laundering compliance
Considering an AML solution? Some key factors to take into account.
ACCA’s Technical Advisory Service is regularly contacted by members who have been approached by commercial firms which claim to offer a ‘complete’ or ‘one stop shop’ solution to complying with their anti-money laundering (AML) responsibilities.
It is very important that members comply with the AML section of the Rulebook 2016 (starting page 419) and in some cases this may not be possible by simply using an outside commercial solution. Of particular importance is the ‘client identification’ section.
A brief recap of the main things that need to be done under our regulations:
Client identification Before any work is undertaken, the professional accountant shall verify the identity of the potential client by reliable and independent means. The professional accountant shall retain on their own files copies of such evidence, as set out in paragraph 17.
This will involve the following:
where the client is an individual: by obtaining independent evidence of the client’s identity, such as a passport and proof of address
where the client is a company or other legal entity: by obtaining proof of incorporation; by establishing the primary business address and, where applicable, registered address; by establishing the structure, management and ownership of the company; and by establishing the identities of those persons instructing the professional accountant on behalf of the company and verifying that those persons are authorised to do so
in either case: by establishing the identity and address of any other individuals exercising ultimate control over the client and/or who will be the ultimate beneficiaries of the work or transactions to be carried out
by establishing precisely what work or transaction is desired to be carried out and to what purpose.
If the professional accountant is unable to satisfy himself/herself as to the potential client’s identity, no work shall be undertaken.
What commercial firms provide There are quite a number of firms offering AML solutions and their services vary. For instance many offer a risk-based approach to analysing transactions and online name checks/comparisons to exposed persons lists etc. ACCA acknowledges that some of these services may well be complementary to a member's overall AML policies. However, the above identification rules are often not satisfied by the commercial firm’s services, leaving the member unaware that they are in breach of ACCA regulations.
Action to take
before committing to using a commercial firm, ensure that you know exactly what you will get for your money
where the services do not cover the above points it will be up to the firm to carry out their own checks to ensure compliance.
In many cases ACCA members can satisfy themselves as to the identity of clients by simple measures including meeting the client, obtaining the relevant documents face to face and establishing the nature of the business by discussions and searches.
AML solution firms can be useful to ACCA members but make sure that all points are covered by an overall internal control policy involving further checks where needed.