Anti-money laundering (AML) compliance: the cost of doing nothing
HMRC has imposed a £16,891 penalty on an accountancy firm due to non-compliance with anti-money laundering (AML) legislation.
The accountancy firm was refused permission by the tax tribunal to appeal the anti-money laundering (AML) penalty on the grounds that it took six and a half months for them to file their appeal.
What AML non-compliance occurred?
In January 2018, the firm was initially pulled on AML non-compliance during an inspection that revealed:
- No formal risk assessment in writing for new clients
- Policy and procedure documents had not been updated in line with the 2017 regulations
- Incomplete customer due diligence
What we can learn from this case
When it comes to AML-compliance, doing nothing isn’t an option; accountancy firms must consider their options, and ensure they approach ‘the issue’ in the right way.
As highlighted in this case, failing to comply can result in a hefty fine, which showcases the importance of investing in your AML-compliance.
To achieve AML-compliance, considerations are needed around the resources, technology and time required to ensure all clients are up to date.
The consequences of non-compliance
Failing to comply with AML regulations can result in a hefty fine, but the consequences don’t stop there.
The following can also take place due to non-compliance:
- Court proceedings
- Exclusion from being a member of a professional accountancy body
- Reputational damage
- In extreme cases – imprisonment
Understanding AML: what exactly is money laundering?
Money laundering is any activity carried out to disguise the financial proceeds of crime.
The term doesn’t only refer to laundering cash from drug dealing or theft – it also encompasses funds or assets obtained from fraud, bribery, corruption, or tax evasion.
Tackling money laundering
So, what can accountants do to not only comply with AML but also prevent any crimes happening under their supervision?
The following steps should be taken:
- Clear, transparent and thorough record-keeping
- Carry out regular risk assessments
- Handle all activities with due diligence
- Keep all teams up to date with the recent legislation
- Manage and document all AML policies and procedures
- Automate and digitalise the AML processes
How can IRIS help?
IRIS AML enables accountants (and other professionally regulated businesses) to streamline all aspects of compliance and ongoing monitoring.
By automating part of the process, the software helps remove the stress of compliance and enables you to identify non-compliance across your client base.