How to manage AML processes in your practice

According to the United Nations Office on Drugs and Crime, up to 5% of global GDP is laundered every single year. It is a staggering figure and one that’s important for accountants.

By law, all registered accountants must comply with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). However, this is not without its challenges. Here’s what you need to know.

Understanding AML Compliance in Accounting

The very nature of accountancy means that your industry is at a higher risk of money laundering than most. By law, you must be registered for AML supervision with HMRC or an accounting body.

As an accountancy firm, it is your responsibility to understand the 2017 regulations and to ensure that you are compliant. If you fail to comply and money laundering offences are discovered within your organisation (or could have been prevented if your organisation had adhered to the regulations), severe penalties may be imposed.

It’s vital for you to have controls and systems in place that assess the risk presented by each of your clients. Various different AML checks can be used, from basic “know your customer” verification to real-time checks that assess potential money laundering risks.

If you spot any suspicious activity as a result of these checks, this activity should be reported – both internally and to the National Crime Agency. You should also keep appropriate records of your compliance with regulations and any reported activity.

Managing AML processes can be challenging if not approached properly. That’s why adopting the right AML strategies in accounting is vital.

Key Strategies for Managing AML Processes

When considering AML best practices for your accountancy firm, your first step should be to develop an AML policy for your business.

The first step in AML compliance for accountants is to employ an AML compliance officer—a mandatory obligation for UK accounting firms. This officer must have the knowledge and experience to detect, prevent, and report financial crimes. It is their responsibility to identify and report any suspicious activity to the authorities.

A formal, written AML policy will ensure that everyone in your organisation is aware of AML’s best practices and understands the necessary steps to maintain compliance. Your approach should be risk-based and should include:

• Identifying and evaluating potential risks
• Designing, implementing and monitoring systems and controls
• Recording what you have done and your reasons behind it
• Review processes, systems and controls—as well as official guidance and regulations—regularly to ensure maximum efficiency and effectiveness.

Just as vital as developing an AML policy is giving appropriate training to your team. Everyone in your organisation should be aware of the importance of AML compliance for accountants, as well as what their individual responsibilities are – and the potential consequences of non-compliance.

While this may seem like a lot of work, a failure to adopt AML strategies in accounting can have devastating consequences. Fortunately, there are plenty of tools and technologies that can help you manage AML processes with ease.

Tools and Technologies for AML Management

One way to ensure accountants’ compliance with AML is to use software solutions designed specifically for AML tracking and reporting. Good AML software can help with Know Your Customer checks, including screening and monitoring your clients for adverse media and identifying any politically exposed people.

It can also help to analyse transactions, conduct ongoing client checks and allow you to collate data to produce suspicious activity report (SAR) forms.

Some AML software solutions also include built-in training functionality, SAR portals, templates for various AML activities and more. They can also be integrated with your existing systems, eliminating the need for manual data/information input in places.
Choosing the right software to help you manage AML processes in your accounting firm can make the task at hand far easier. But what are your legal requirements?

Navigating Legal Requirements in AML

As an accountant, your AML obligations are both ethical and legal. You are responsible for staying up-to-date with the latest AML legislation and ensuring that your practice complies with the relevant parts. You are also responsible for doing customer due diligence for every client, keeping accurate records, and reporting potential money laundering activity to the authorities.

For this to happen, you need to ensure that your practice adheres to AML’s best practices for monitoring, record-keeping and reporting. If this sounds too challenging for you to achieve alone, don’t worry: there is plenty of external support that can help to keep you compliant.

Why Join ICPA: Advantages for AML Management

We know that AML compliance for accountants can be challenging. That’s why we’ve teamed up with AMLCC—the leaders in compliance and risk management—to offer discounted access for ICPA members.

This online platform easily integrates into your business and is simple to use, giving you the confidence that you’ll be meeting the required criteria for AML. It helps you to manage AML processes throughout your organisation to avoid the risk of laundering – and the associated consequences.

But that’s not all. ICPA members also benefit from access to helplines where they can have all of their AML questions answered, as well as networking and professional development opportunities to keep them at the top of their game.
To learn more about ICPA member benefits, click here. If you have any questions about how we can help you manage AML processes, please don’t hesitate to contact us.