Anti-money laundering

Serious and organised crime costs the UK economy billions each year. The majority of its financial proceeds are laundered through UK banks and other regulated businesses, as are trillions of pounds each year from international criminal activity or corruption. While money laundering is itself an example of serious crime, this illegal practice plays a wider role, as it transfers financial power from legitimate businesses and individuals into the hands of criminals, while undermining financial institutions and markets. 

The traits or characteristics for identifying criminal activity are becoming increasingly blurred and professional services, such as accountancy, provide a gateway for criminals to disguise the origins of their funds. As such, accountancy service providers and Trust or Company Service Providers have a significant role to play in ensuring their services are not used to further a criminal purpose. As professionals, accountants must act with integrity and uphold the law, and they must not engage in criminal activity.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

All regulated businesses, including AAT Licensed Accountants and Bookkeepers offering self-employed services, must comply with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) as amended, updated or re-enacted from time to time.

An important part of our role as a supervisory authority under the MLR 2017 is to provide guidance and support to our members to help them comply with their anti-money laundering (AML) obligations.

Anti-money laundering policies, controls and procedures

The MLR 2017 requires regulated businesses (firms and sole practitioners) to establish and maintain policies, controls and procedures to prevent, detect and report money laundering, terrorist financing or proliferation financing activity.

These policies, controls and procedures must be proportionate to the size and nature of the business, approved by senior management, and include:

• risk management
• internal controls
• customer due diligence
• reliance and record keeping
• compliance monitoring.

Regardless of whether the business employs staff, these policies, controls and procedures must be documented in writing and must be regularly reviewed and updated, with any changes being recorded. Where there are staff present, these policies, controls and procedures should be communicated internally.

AAT has produced the following templates to assist businesses in documenting their firm’s AML policies, controls and procedures:

• AML policy statement template (docx)
• AML compliance - policy, controls and procedures template (docx)

Below we go into more detail around the requirements of each area but businesses should also refer to:

• Anti-money laundering and counter-terrorist financing guidance for the accountancy sector (AMLGAS) – published by the Consultative Committee of Accountancy Bodies (CCAB) and drafted to help accountants (including tax advisors and insolvency practitioners) comply with their obligations under the relevant AML legislation
• Anti-money laundering: The basics – developed by IFAC in collaboration with ICAEW and published in instalments to help professional accountants enhance their understanding of how money laundering works, the risks they face, and what they can do to mitigate these risks and make a positive contribution to the public interest.

Risk management

A whole firm-wide risk assessment must be performed and documented regularly, and it should be proportionate to the size and nature of the firm. There is a requirement for this risk assessment to consider the risk factors relating to:

• the firm’s customers
• the countries or geographic areas in which the firm operates
• the firm’s products and services
• the firm’s transactions
• the firm’s delivery channels
• information made available by supervisory authorities.

AAT has produced a Firm-wide risk assessment checklist (docx) to assist firms with their compliance.

Compliance monitoring

• AML periodic compliance reviews must be performed regularly to monitor compliance and effectiveness of the firm's AML policies, controls, and procedures. The findings and required actions from these reviews must be documented.
• All businesses must have their documented policies, controls and procedures, including copies of their compliance reviews, available for inspection by their supervisory authority upon request.

AAT has produced an Anti-money laundering annual compliance review checklist (docx) to assist firms with their compliance.

Anti-money laundering risks in the accountancy sector

When carrying out their firm-wide risk assessment and undertaking their CDD, regulated businesses should give consideration to:

• the UK National risk assessment of money laundering and terrorist financing 2020 (NRA 2020), which concluded that there is a particularly high risk of criminals exploiting accountancy services for the purposes of money laundering and determined that high-end money laundering and cash-based money laundering remain the greatest areas of risk in the UK. It also discovered that the traits or characteristics for identifying criminal activity are becoming increasingly blurred and that professional services, such as accountancy, provide a gateway for criminals to disguise the origins of their funds
• the UK National risk assessment of proliferation financing which highlights the key proliferation financing threats facing the UK today, as well as the specific vulnerabilities in the UK economy and financial system which actors may target to gain financing for their proliferation activities
• the Accountancy AML supervisors group risk outlook (PDF), which identifies the circumstances where there might be a high risk of money laundering or terrorist financing in the accountancy sector and sets out the key risks and red-flag indicators to look out for based on emerging threats and trends.

Suspicious Activity Reporting

If you "know", "suspect" or have reasonable grounds for knowing or suspecting that a person is engaged in money laundering or dealing in criminal property, you must submit a Suspicious Activity Report (SAR) to the National Crime Agency (NCA) as soon as it is reasonably practicable.

A SAR alerts law enforcement that certain client activity/transactions are in some way suspicious and might indicate money laundering or terrorist financing activity. It provides valuable information on potential criminality and protects you, your organisation and UK financial institutions from the risk of laundering the proceeds of crime. Failure to submit a SAR once you have reasonable grounds to do so is a criminal offence.

The easiest and quickest way to submit a SAR is using the SAR online service. Before you submit a SAR, we strongly encourage you to read the guidance documents available on the NCA website. These include but are not limited to:

• Submitting a suspicious activity report (SAR) within the regulated sector
• Guidance on submitting better quality SARs
• Requesting a defence under POCA and TACT.

Once you have submitted a SAR, you must not discuss, inform or tip off the party involved as this will lead to an investigation being prejudiced, so you must give careful consideration to how you will handle your relationship after submitting this.

When submitting a SAR, the relevant UKFIU glossary code should be used to help the NCA identify specific types of activity, ensure the SAR is handled by the correct agency and allow the UKFIU and wider law enforcement to conduct analysis to identify money laundering trends. Find the latest updated glossary codes on the NCA website.

In March 2022, the UKFIU introduced a new SARs glossary code for entities associated to sanctioned individuals and companies on the sanctions list. Use the code XXSNEXX where you suspect the activity is consistent with money laundering and is linked to entities sanctioned by the UK, US, EU and other overseas jurisdictions as a result of the Russian invasion of Ukraine.

For more information on what must be reported, when and how a report should be made and consent please refer to AMLGAS.

AAT anti-money laundering supervision

We act as a money laundering supervisor for AAT licensed members who provide accounting and bookkeeping services to clients. In this capacity, we have a responsibility to protect the accountancy sector from being exploited by criminals. We do this by:

• helping AAT licensed members understand their legal obligations by providing them with a range of additional resources and guidance for licensed members
• conducting practice assurance reviews of our supervised firms
• taking appropriate enforcement action against firms who are not complying with the law
• reporting potentially suspicious activity to law enforcement and other relevant authorities.

To support us in our role, we are supervised by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), a regulator set up by the government to strengthen the UK’s AML supervisory regime. OPBAS regulates over 20 professional bodies and ensures that professional bodies' AML supervisors provide consistently high standards.

Definition of beneficial owners, officers and managers (BOOMs)

The MLR 2017 define these terms but the Accountancy AML Supervisors Group (which comprises all the accountancy professional body supervisors) have agreed further guidance to identify the relevant roles.

Trust or company service providers (TCSPs)

According to the National risk assessment of money laundering and terrorist financing 2020 (NRA 2020), "Company formation and associated TCSP services continue to be the highest risk services provided by ASPs for money laundering. These can enable the laundering of millions of pounds, conceal the ownership of criminal assets and facilitate the movement of money to secrecy jurisdictions.”

To help combat this, the MLR 2017 introduced a TCSP register held by HMRC. This holds all individuals and practices who offer TCSP secretarial services and is accessible to law enforcement agencies to use for their activities.

Businesses that are not on the register are not permitted, under the MLR 2017, to provide TCSP work.

Anti-money laundering helpline

AAT’s AML helpline offers AAT supervised firms advice on all aspects of complying with the Money Laundering Regulations, such as advice on how to report suspected illegal activity. If any information discussed leads us to suspect money laundering activity, you'll be required to make a report to law enforcement agencies.

To discuss any questions you might have, call us on +44 (0)20 7367 1347 or email aml@aat.org.uk.

Important: if you're seeking information or guidance on how to apply for AML supervision by us, please visit the Apply to be an AAT licensed member page. Please note we will only act as the registered authority for our own professional members holding a valid practising licence with us. If you are not a professional member of AAT (or any other professional accountancy body), HMRC is the default supervisory authority for accountancy/tax advisors. Please visit Register or renew your money laundering supervision with HMRC.

Additionally, please do not email aml@aat.org.uk to request proof of anti-money laundering (AML) supervision or an individual AML supervision number if you are applying for Tax Agent status with HMRC. To evidence your firm is supervised, you should provide HMRC with your AAT number along with a link to AAT's Licensed Accountant or Licensed Bookkeeper Directory. To avoid any unnecessary delays or risk your application being declined, please ensure you provide HMRC with your full name and correct registered business/trading name and address to enable them to easily verify your firm's supervision status. We will inform HMRC if your licence or AML supervision expires or is terminated by us at any point. If you have any questions or concerns with your current licence or supervision status please contact customer.support@aat.org.uk.

Anti-money laundering whistleblowing

If you identify an accounting service provider or trust and company service provider that doesn't appear to be supervised under the MLR 2017, or is disregarding the requirements of the regulations, you can contact:

• the firm's relevant supervisory body – if your AML concerns are about an AAT member or firm, please refer to our whistleblowing guidance
• the MLR Central Intervention Team at MLRCIT@hmrc.gov.uk where the firm is not a member of a professional body.