Accountancy firms in the UK must be supervised for anti-money laundering under the Money Laundering Regulations 2017. Supervision comes either from a professional body, such as ICAEW, ACCA or AAT, or, for firms not covered by one, from HMRC. A firm cannot lawfully provide accountancy or tax services without being registered for AML supervision, and non-compliance can bring financial penalties and, in serious cases, criminal liability.
AML supervision exists because accountants and tax advisers are in a position to spot, and potentially be used for, money laundering. The regulations put a duty on firms to have proper controls, and on a supervisor to check they do.
Who supervises accountants for AML?
If a firm belongs to a professional body that is an AML supervisor, such as ICAEW, ACCA, AAT, CIOT or others, that body supervises it. A firm not covered by any professional body supervisor must register with HMRC, which is the default supervisor for accountancy and tax service providers. Every firm in scope must be supervised by one or the other; being supervised is not optional.
What does AML supervision involve?
The firm must carry out a money-laundering risk assessment, put in place written policies, controls and procedures, train staff, and carry out client due diligence, checking who its clients are and, where required, their source of funds. The supervisor then checks compliance, which can include announced or unannounced visits and reviews of the firm’s procedures, training and records.
What are the obligations on a firm?
Core duties include verifying client identity, keeping records, monitoring for suspicious activity, and reporting suspicions to the authorities through a suspicious activity report. The firm usually appoints a nominated officer responsible for receiving internal reports and deciding whether to report onward. These are legal duties, not just good practice.
What happens if a firm is not supervised?
Operating without AML supervision is unlawful. Firms that fail to register, or that breach the regulations, can face financial penalties and, in serious cases, criminal charges, as well as professional consequences. The framework has also been the subject of government review aimed at simplifying the number of supervisors, so firms should keep an eye on how it develops.
Where cover fits
AML compliance sits alongside the other professional obligations a firm carries, including holding professional indemnity insurance and following the PCRT code. To review your practice’s cover, get a quote or speak to the team.