One size fits all?

Recently I was having a chat with a group of “practitioner accountants” – those who run (often quite small) accountancy firms, rather than working as accountants within industry.  We were talking, as you do (well, you do if you’re me) about business risk assessments, and the risk-based approach, and AML policies and procedures.  And I was surprised to hear that in this sector, it is very much the norm to buy an off-the-shelf AML manual.  They mentioned a couple of providers – Mercia was one, I think – and everyone nodded in agreement.  “I take their one,” explained one accountant, “cross out the bits that don’t apply to us, and tell my staff to read it every year”.

Now I am well aware – more than aware, if the yawns are anything to go by – that not many people get as excited as I do at the prospect of writing an AML manual.  But I do: I love it.  And I will admit that when a client asks me to do this for them, I do not start with a blank page: I have a skeleton structure that I use.  I know the manual will have to cover corporate governance and due diligence and internal reporting, and so I have section headings in place for them.  But the text, well, that’s much more free-form.  And the reason for this is that I expect the client to have done their own business risk assessment which will guide their AML emphasis and procedures and, by extension, their AML manual.  This business risk assessment may not be a very formal document – although increasingly it is – but that’s the order I am used to: risk analysis leads to deliberations about procedures leads to manual.

Now I am not saying that the accountants are wrong; after all, they have been doing it this way for years and have all been checked by their institute on a regular basis, which is obviously happy with the AML regime it sees when it visits.  But I do wonder where the risk-based approach fits in.  Someone did say that the manual is only general – in short, it says, “Do due diligence checks on client” – and the risk-based decisions (about what level of DD checks to do, for instance) come in later down the line.  But perhaps this approach can only work in small organisations where all decisions are shared and there is no worry about a distant member of staff making a peculiar decision about what level of checks to apply.  Interesting – and a handy idea for my retirement…

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2 Responses to One size fits all?

  1. David Winch says:

    Generally speaking most small firms of accountants will provide services of preparing annual accounts & tax returns but will not, for example, provide investment advice or handle any monies belonging to their clients. So they will very rarely have, for example, consent request as an issue.

    They are in a very different position from, say, conveyancing solicitors or banks.

    The type of criminality at the forefront of their mind will be tax evasion. It is unlikely that, say, a drug trafficker will employ an accountant.

    An issue that they fail to recognise often is that an otherwise legitimate trader or client may be engaged in non-tax offences such as mortgage fraud, benefit fraud, trading standards offences, etc. and these may trigger a need to submit a suspicious activity report. Also they sometimes fail to recognise the need to report when their client is not the person suspected of ML – for example where a client is a victim of theft by his employee.

    Some accountants think that their money laundering responsibilities begin & end with taking a copy of their client’s passport!


  2. Many thanks for these clarifications, David – and I think you’re on the ball when you say that there is a lack of recognition of the more imaginative ways in which their sector could be used. We should also remember that money launderers will often run entirely legitimate businesses as well, complete with these accountancy services in place, in order to build up or bolster a reputation for probity and legitimacy.
    Best wishes from Susan

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