Money Laundering Regulations 2017

money laundering regulations

What you need to know (and do) By SPA Member Keith Laurence of KL Compliance Solutions Ltd

As we reported in our January newsletter changes happened in the Anti-Money Laundering regime back in June 2017. We believe that there are 4 specific regulations with which all accountants should be familiar because they have a direct impact on the things you should do – particularly if the QAD comes to call.

SPA member Keith Laurence has summarised them for you.

Risk assessment by firms - Regulation 18

This is an area of concern for SPA members.

Firms are reminded they must take appropriate steps to identify and assess the risks of money laundering and terrorist financing to which its business is subject.

Risk factors include:

  • its customers;
  • the countries or geographic areas in which it operates;
  • its products or services;
  • its transactions; and
  • its delivery channels.

In preparing their risk assessment, firms must consider the size and nature of its business and records must be kept of the steps taken in this process.

Policies, controls and procedures - Regulation 19

This is an area of concern for SPA members. Firms must establish and maintain policies, controls and procedures to mitigate and manage effectively the risks of money laundering and terrorist financing identified in any risk assessment undertaken by the firm. These should be reviewed and updated, be proportionate to the size and nature of the firms’ business and be approved by the senior or sole partner. All steps taken should be documented.

These policies, controls, and procedures must include:

  • risk management practices;
  • internal controls including the reporting of suspicious transactions;
  • customer due diligence;
  • record keeping;
  • the monitoring and management of compliance with, and the internal communication of, such policies, controls and procedures;
  • training

The Nominated Officer (aka MLRO) - Regulation 21

A firm must appoint an individual to be Nominated Officer or Money Laundering Reporting Officer (MLRO). In smaller firms, the sole or senior partner is usually the Nominated Officer or MLRO. This individual is responsible for the firm’s compliance with the Regulations.

This appointment must be reported to the firm’s AML supervisor within 14 days of their appointment. A firm must assess (i) the skills, knowledge, and expertise of the individual to carry out their functions effectively; (ii) the conduct and integrity of the individual.

Where a disclosure is made to the nominated officer, that officer must consider it in the light of any relevant information which is available to the relevant person and determine whether it gives rise to knowledge or suspicion or reasonable grounds for knowledge or suspicion that a person is engaged in money laundering or terrorist financing.

A firm must have in place systems which enable it to respond fully and rapidly to any enquiries from its supervisory authority, an accredited financial investigator or law enforcement.

BOOMs and DBS checks - Regulation 26

The question has arisen about whether our members are required to apply for a Standard Disclosure and Barring Service (DBS) check with respect to approvals and prohibitions. On the question of approvals and prohibitions, the Money Laundering.

Regulations 2017 offer little guidance save that:

  • Beneficial owners, officers or managers of firms (BOOMs) or sole practitioners must have received approval from their supervisory authority;
  • The application to the supervisory authority must contain or be accompanied by such information as the supervisory authority may reasonably require;
  • The authority must grant approval unless the applicant has been convicted of a criminal offence;
  • If an approved person is convicted of a criminal offence, the authority must be informed within 30 days of the firm or sole practitioner being aware of the conviction.

On the question of DBS checks, accountancy firms must apply for standard DBS checks for new appointees as principals in the firm. These checks will disclose all convictions including spent convictions. The convictions most likely to prove that an individual is unsuitable for the role of accountant relate to fraud or financial misconduct.

The guidance from our professional body in respect of DBS checks is unclear in respect of those accountants, who are already approved by their professional body and have been in situ since before the introduction of the DBS. The SPA is making representations to ICAEW to clarify what is required of our members in respect of DBS requirements. We shall keep you advised.

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