Counting the cost of money laundering

Accountants face a criminal record if they can’t prove their innocence — make sure you don’t pay the price

Monday 05 February 2018 16:24

More than £90bn a year is estimated to be laundered through the UK. And the consequences that result from the serious crimes this enables range from people being deprived of their security and prosperity, right through to loss of life. It’s a huge problem, but one that’s being tackled.

Elaine Smyth (below), senior manager of professional standards at the Association of International Certified Professional Accountants, explains: “Because these figures are so huge, I think there’s a danger of accountants, particularly SMEs and sole practitioners, feeling distanced from it. But every accountant is at risk of being a target for money laundering and these billions of pounds come from a vast number of multiple sources.”

Because organised criminals depend on being able to disguise the proceeds of their crime, they rely on the existence of legitimate financial systems. “We know from the recently published National Risk Assessment (NRA) that the main risk areas include the creation and operation of companies and facilitating of financial transactions through client accounts,” she says.

Elaine Smyth, senior manager of professional standards at the Association of International Certified Professional Accountants

Risks to professionals

Besides the wider effects on society — which include funding human trafficking, drug and weapons crime, and even terrorist financing — there are significant risks to accountants themselves. “Unless you can prove, in any investigation, that you had no knowledge or suspicion of the money laundering whatsoever, you could wind up with a criminal record,” explains Smyth.

But there are ways to protect yourself. “In our anti-money laundering talks to accountants, we’re always stressing the need to undertake proper risk-based due diligence and that includes documenting everything,” says Smyth, above.

“Equally essential is following the Money Laundering Regulations 2017, which means submitting a Suspicious Activity Report (SAR) if you are wary, or risk facing prosecution.”

Suspicious signs

A high-quality SAR could provide a crucial piece of intelligence needed to tackle money laundering, terrorism, serious and organised crime, corruption and fraud.

A high-quality SAR could provide a crucial piece of intelligence needed to tackle money laundering

The Flag It Up campaign details the red flags accountants should look out for. Is the client behaving suspiciously or secretively? Are the amount of funds and their sources unusual? Are there any discrepancies in transactions? Are there any inconsistencies with regards to the source of wealth? As Smyth says: “It all boils down to professional scepticism — if something doesn’t feel quite right, then it probably isn’t.”

Some accountants may not submit SARs because they feel they’re betraying their client. “Others say they don’t have time because they’re trying to run a business,” adds Smyth.

“But there’s guidance available and SARs are confidential. Ultimately, if accountants don’t fill out a SAR when necessary, they may find they don’t have a business left to run.”

* All content was commissioned and approved by the Home Office

For further details on the Flag It Up campaign, go to flagitup.campaign.gov.uk or to submit a Suspicious Activity Report go to nationalcrimeagency.gov.uk