Donald Rumsfeld, former US Secretary of Defence, is famously quoted as saying: “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.” This often aptly sums up students’ approach to AML compliance.
The good news is that most of the ‘known unknowns’ are covered in the recently published Anti Money Laundering Guide for the Accountancy Sector (AMLGAS), which was issued on 7 March 2018. The guidance details roles and responsibilities to enable firms and employees to achieve a level of compliance as required in The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR17) which came into force on 26th June 2017.
The AMLGAS was produced by the CCAB in consultation with the accountancy bodies listed in schedule 1 of MLR17 and approved by HM Treasury which effectively lifts the status of the document so that courts within the UK will have to consider it when determining compliance with the relevant legislation.
The good news is that AMLGAS has been adopted by all the UK accountancy and bookkeeping AML supervisory bodies. There are 15 bodies in total, which includes HMRC.
The AML regime is not just the responsibility of the senior team in a firm. The regulations refer to ‘Relevant Employees’, which are defined in AMLGAS as “an employee whose work is relevant to compliance with the Regulations, or is otherwise capable of contributing to the identification and mitigation of the risks of money laundering and terrorist financing to which the business is subject, or to the prevention or detection of money laundering and terrorist financing in relation to the business”.
The regulations don’t go on to define accountancy services, but AMLGAS defines them as “any service which involves the recording, review, analysis, calculation or reporting of financial information, and which is provided under arrangements other than a contract of employment” and that could, of course, include many areas that students and part qualified accountants undertake.
So to begin with, all students should obtain a copy of the accountancy sector guidance and read it to make sure you are aware of issues that may impact on your role, however to begin with you may want to focus on the following areas.
This is a new requirement placed on the firms to screen employees both as part of the recruitment process and throughout their employment and requires an assessment of the skills, knowledge and expertise required to carry out AML duties. If you are regarded as a relevant employee your employer is likely to approach you to provide a criminalitycheck to ensure you have no unspent convictions as listed in schedule 3 ofMLR217. This requirement relates to allBeneficial Owners, Officers or Managers(BOOMs) within the firm and will berequested by the firms AML supervisorybody. However, this is an area within theAML regulations that varies according tothe size and nature of your firm.
Firm Risk Assessment
All firms are now required to complete arisk assessment of its AML policies and procedures, client risk, service risk and geographic risk. So make sure you haveaccess to a copy of the assessment, referto it frequently and, where possible,engage in the process of writing orupdating the document.
AML Policies and Procedures
Each firm should have up-to-date AMLpolicies and procedures and ensure that employee training is undertaken regularly. As a relevant employee you should ensure you understand your role within the compliance function and engage and log any AML training provided.
MLRO and Duputy MLRO
Within the firm’s policies and procedures should be a clear line of responsibility and internal controls relating to escalation of suspicions to the firm’s Money Laundering Reporting Officer (and deputy MRLO if appropriate and where available). It is the MLRO’s responsibility to take the decision whether or not to submit a Suspicious Activity Report (SAR), so your responsibility is effectively over once you have submitted an internal report and received confirmation from the MLRO of its receipt.
AML compliance should not be seen as a tick-box exercise, but should be part of the fabric of the firm, with engagement encouraged and championed from board level and throughout the organisation. So students should take time to read through the sector guidance and challenge your employees where you have concerns.
AMLGAS and MLR17 can be downloaded at www.aiaworldwide.com/anti-money-laundering-supervision