With thanks to Will Drysdale, Senior Reporter, Business & Accountancy Daily
In 23/24 ICAEW raised the bar for a firm to be AML “compliant”.
One member firm was struck off by the ICAEW and 215 supervised firms were told to improve their processes in 2023/24.
ICAEW sanctioned 39 supervised firms for AML failures in the 12-month period and they were fined £92,025 for failing to follow anti money laundering rules when taking on clients. The highest fine was for £8,000, for an unnamed incident, and the lowest for £560. One member was excluded from membership.
1,088 reviews were carried out with 35% categorised between a high and medium risk of being used to enable money laundering leading to 1,896 criminal record checks. ICAEW supervises 11,000 firms for AML and checks more than one in 10 practices of all sizes.
In 2022/23 two members were excluded, and 35 fines were handed out. The fines amounted to £218,275, ranging from £350 to the largest fine at £32,725.
After one site inspection ICAEW inspectors reported: ‘We concluded an onsite monitoring review in June 2023 to a “regional” firm and found extensive inadequacies in the firm’s AML procedures including documentation of risk assessments and ongoing customer due diligence.
“We reported the firm to the practice assurance committee (PAC) for formal follow-up action, which considered the case in November 2023.
The PAC decided to require the firm to update customer due diligence (CDD) for all clients by 31 May 2024 and also required the firm to have a follow-up visit, paid for by the firm, by 31 July 2024. The firm received a practice assurance penalty of £4,000.”
79,536 individuals accessedinformation produced by ICAEW on AML.
Among the top risks trust and company services, holding large sums of clients’ money, payroll services, and clients based in high risk countries, politically exposed or dealing in high risk business activity. Clients with poor compliance history and high net worth (HNW) are also seen as risky.
ICAEW target our resources where the risk is greatest, determining that risk from a range of sources including UK national risk assessments, information and intelligence shared with them by other regulatory, supervisory and law enforcement organisations, information submitted to ICAEW by the firms via their annual return, our knowledge of the firm based on its supervisory history and complaints made by the public.’
When it goes wrong, it was usually down to a lack of knowledge of relevant regulations.
The report noted: ‘We generally find that firms are trying their best and will believe that they have good compliance, policies and procedures in place, but our monitoring Reviews find that they have failed to grasp the requirements fully.
ICAEW find that firms have not regularly revisited their risk assessments and mitigation work.
Members regularly ‘fail to identify obvious risks’ and believe ‘it will never happen to them’ leading them to become complacent when assessing clients.
There were also instances where firms claimed they had a lack of money to fund AML compliance officers correctly, which led to inadequate time being dedicated to the compliance.
ICAEW re-focused monitoring methodology away from assessing technical compliance to the effectiveness of firms’ policies and procedures.
Kind regards,
Howard Gross BFP FCA FCCA CTA
Director
