The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act.
Money laundering is the processing of these criminal proceeds to disguise their illegal origin and to make them appear legitimate, allowing criminals to enjoy these profits without jeopardising their source of income.
Illegal arms sales, smuggling, and the activities of organised crime, including for example drug trafficking and prostitution rings, can generate huge amounts of proceeds. Embezzlement, insider trading, bribery and fraud schemes can also produce large profits and create the incentive to 'legitimise' ill-gotten gains through money laundering.
When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or the persons involved. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.
Money laundering is not only a crime itself, but also a key enabler of other serious crimes such as modern slavery, drugs trafficking, fraud, corruption, and even terrorism.
While money laundering isn’t always obvious, the consequences are severe. Even accidental involvement in money laundering could mean losing your licence, receiving a fine, or facing criminal prosecution.
Professionals working in the accountancy, legal and property sectors are targeted because of their expert skills and services (National Risk Assessment 2020), which can give a cloak of legitimacy to illicit cash. This gives professionals a crucial role to play in protecting the UK’s economy, and wider society by reporting suspicious activity.
AIA supervises its practising members for the purposes of the Money Laundering Regulations 2017 (amended 2019), where AIA is listed in schedule 1 as an approved supervisory body. In the Republic of Ireland AIA is a designated body under the Criminal Justice (Money Laundering and Terrorist Financing) Act and SI No. 578/2019 - European Union (Money Laundering and Terrorist Financing) Regulations 2019.
The Regulations ensure appropriate and proportionate measures to deter, detect and disrupt money laundering and the financing of terrorism and are applicable to all practising accountants, persons and firms providing ‘accountancy services’. Those offering accountancy services who are not supervised by an approved body will be breaking the law.
The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
Accountants are key gatekeepers for the financial system, facilitating vital transactions that underpin the UK economy. As such, they have a significant role to play in ensuring their services are not used to further a criminal purpose. As professionals, accountants must act with integrity and uphold the law, and they must not engage in criminal activity.
MLR2017 requires all firms that provide accountancy services, trust or company services, or related services such as tax advice, audit or insolvency, to be supervised for compliance by a professional body listed in schedule 1 of MLR2017.
Regulation 8 of Money Laundering Regulations 2017 states that the regulations apply to any persons acting in the course of business as an auditor, insolvency practitioner external accountant, tax adviser or trust and company service providers. You can use this flowchart to identify who the supervisory authority should be for your firm.
AIA automatically supervises members holding a Practising Certificate unless they are confirmed to be supervised by another professional body under MLR2017. Members that provide trust or company services as part of their main accountancy practice will be supervised by AIA for all their work.
If a member has a group structure and has subsidiaries which are authorised firms under the Financial Services and Markets Act for FCA-authorised activities, AIA will supervise the non-FCA regulated work.
Guidance is essential for all entities providing audit, accountancy, tax, insolvency or related services in the United Kingdom and Republic of Ireland (including firms providing trust or company services) by way of business, irrespective of membership of a recognised professional body and sets out how to fulfil AML regulatory requirements.
AIA offers extensive guidance and support for supervised firms including:
In addition AIA provides:
The United Kingdom and Republic of Ireland governments undertake National Risk Assessments which draw together risk-based information and threat analyses from all sectors in scope of the AML requirements, law enforcement and other sources.
A risk-based approach requires firms assess risks and target resources to the areas or products that are most likely to be used to launder money.
To fulfil AIA's requirements under Regulation 17 of MLR2017 we produce a risk assessment of our supervised sector so firms can understand the money laundering and terrorist financing risks to which they are exposed.
AIA's Sector Risk Assessment must be considered when each firm creates and updates its firm-wide risk assessment.
This document sets out information on money laundering and terrorist financing risk considered most relevant for supervised firms and is updated regularly in response to emerging risks and trends.
As an approved supervisory body under the MLR2017 AIA is regulated by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS). OPBAS is a regulator set up by the government to strengthen the UK’s AML supervisory regime and ensure the professional body AML supervisors provide consistently high standards of AML supervision.
AIA also works in the public interest as part of the Accountancy AML Supervisors' Group (AASG) working closely with HM Treasury, the Home Office and the National Crime Agency to represent members' views and to communicate up-to-date information and guidance back to you. The AASG is a sub committee of the UK Anti-Money Laundering Supervisors Forum (AMLSF), a forum in which professional bodies work collaboratively to develop supervisory policy to promote consistency in standards and best practice and receive AML intelligence from law enforcement agencies and the government.
AIA works in collaboration with law enforcement agencies, regulators and other professional body supervisors to share intelligence and actively combat money laundering and terrorist financing through the Accountancy Sector Intelligence Sharing Expert Group (ISEWG).
AIA is also a signatory to the Joint Fraud Taskforce Accountancy Charter which is a voluntary agreement between law enforcement, professional supervisory bodies and government to better understand and tackle fraud. One of its long-term goals is to produce a fraud toolkit which includes advice and guidance to accountants on current fraud risks, checks they can undertake to help identify potential frauds and where to signpost victims to for support.