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Accounting
The global AML landscape is diverse and the accounting industry must keep pace with developing rules and regulations in order to meet their compliance obligations.
Why Accountants and Accounting Firms Need AML/CTF?
In addition to providing accounting and advising services, accountants and accounting firms act on behalf of their customers. If you carry out any of the following actions on behalf of a client, you must implement anti-money laundering/counterterrorism financing (AML/CFT) controls as a registered accounting company, certified chartered accountant, general accountant, or management accountant:
As a licenced insurance firm, agent, or broker, you are a "regulated entity" if you:
As a licenced insurance firm, agent, or broker, you are a "regulated entity" if you:
Paying or receiving funds
Selling, purchasing or the transferring of real estate, securities, or other business assets
On behalf of an insurer or customer, you request, negotiate, or initiate insurance contracts
Risk exposure
Accounting tasks may involve tax transfers, payments, or wire transfers, as well as bookkeeping or client-side instructions that conceal the source of cash. This enables criminal proceeds to be laundered, putting accountants at risk of exploitation for illicit activity. With such a role as a facilitator, providing a registered office or business address, actively supporting the client in restructuring organisation/ownership structure, or forming shell companies, all offer hazards for the accountant.
Compliance Measures
As gatekeepers of the financial system, accountants are legally obligated to report any questionable client activity, regardless of any contracts or perceived loss of customer trust. They must comply with AML regulations, such as KYC, monitoring, record keeping, client due diligence, and reporting suspicious activity to relevant authorities. Suspicious activities include abnormal transactions, tax evasion, transactions with virtual currency exchanges if considered illegal, trading in restricted goods, transactions with sanctioned organisations or nations, and activities that pose ML/TF threats.
Gaps in Compliance
Clients are able to avoid taxes and relevant laws by using the ability of accountants who are capable of manipulating transactions and obscure any illegal behaviour or financial crime. By serving as a facilitator or delivering instructions on behalf of their customer, an accountant and their associated company are exposed to AML/CFT compliance risks. The largest compliance gaps among accountants are confidentiality contracts and the possibility of losing business.
Establish Compliance
It is expected for accountants and accounting firms to establish risk-based compliance program framework. They are further expected to:
- Analyse the risk posed by a company's services and delivery methods, clients, the country in which it conducts business or operates, the volume or pattern of its transactions, and business relations.
- Design and implement controls and risk reduction procedures in order to reduce risks.
- Establish an AML/CTF program. It should incorporate the identity of a client, beneficial ownership(s), any sanctions, and PEP screening.
- As required by a regulator, have plans and procedures in place for continuing monitoring.
- Develop a risk-based strategy for continuing observation of business relationships, patterns, and transactions.
Maintain your Compliance Program
After establishing a compliance program, it is necessary to set up another system that ensures that the compliance program is being followed. If not followed, businesses may face criminal charges or monetary fines.
To ensure that compliance is constant, it involves:
To ensure that compliance is constant, it involves:
- Educating employees and designating a compliance officer.
- Conducting due diligence (CDD), maintaining, and verifying customer information ongoing CDD, and enhanced due diligence (EDD) for questionable transactions, people, or countries.
- Possessing threshold transaction reporting requirements for payments made or received in virtually or in physical cash.
- The submission of compliance reports, suspicious transaction reports (STRs), and other duties as outlined by a relevant regulator.
- Conducting periodic reviews of your compliance program.
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