Accountants are key gatekeepers for the financial system, facilitating vital transactions that underpin the UK economy. As such, they 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 Regulations ensure appropriate and proportionate measures to deter, detect and disrupt money laundering and the financing of terrorism and are applicable to all practising accountants, persons and firms providing ‘accountancy services’. Those offering accountancy services who are not supervised by an approved body will be breaking the law.
It is not for your supervisor to provide specific legal advice and/or confirmation on the application of the money laundering regulations (MLRs). You must satisfy yourself that you have complied with your legal/regulatory obligations under the MLRs, taking into account the information we provide.
This page sets out the regulatory requirements our Members in Practice must meet and provides guidance and support to ensure compliance. For any queries not answered here please email aml@aiaworldwide.com.
AIA SUPERVISION
The Money Laundering Regulations require all firms that provide accountancy services, trust or company services, or related services such as tax advice, audit or insolvency, to be supervised by one of the professional bodies listed in schedule 1 of the MLR2017 (or HMRC if not a member of a professional body).
AIA automatically supervises Members in Practice under MLR2017 unless they are supervised by another professional body. Members that provide trust or company services as part of their main accountancy practice will be supervised by AIA for all their work.
If a member has a group structure and has subsidiaries which are authorised firms under the Financial Services and Markets Act for FCA-authorised activities, AIA will supervise the non-FCA regulated work.
AIA adopts a risk-based approach to exercise its supervisory functions detailed in the MLR2017, which includes monitoring compliance of members with the MLR2017 by conducting desktop reviews, telephone interviews and monitoring visits.
AIA has a duty to cooperate with other supervisory authorities and law enforcement agencies to counter money laundering and terrorist financing.
REGISTER FOR AML SUPERVISION
If you or your firm are operating in one of the business sectors within the scope of MLR2017 and you are not already supervised by a professional body or the FCA then you must register for supervision. HMRC has further guidance on their website.
If you or your firm are not already supervised by AIA please email aml@aiaworldwide.com.
Money laundering is defined very widely in UK law. It includes all forms of using or possessing criminal property (as well as facilitating the use or possession) regardless of how it was obtained. Criminal property may take any form, including: money or money’s worth; securities; a reduction in a liability, and tangible or intangible property. Money laundering can involve the proceeds of offending in the UK but also of conduct overseas that would have been an offence had it taken place in the UK. There is no need for the proceeds to pass through the UK.
Money laundering activity can include: a single act (for example, possessing the proceeds’ of one’s own crime); complex and sophisticated schemes involving multiple parties; multiple methods of handling and transferring criminal property; or concealing criminal property or entering into arrangements to assist others to conceal criminal property.
An individual can commit a money laundering offence if they:
conceal, disguise, convert or transfer criminal property, or remove criminal property from England and Wales, or from Scotland or from Northern Ireland (section 327); or
enter into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person (section 328); or
acquire, use or have possession of criminal property except where adequate consideration was given for the property (section 329).
In addition to the money laundering offences, there are additional offences which only apply to the regulated sector (those in the scope of the MLR 2017) relating to failure to report a suspicion of money laundering (section 330) and ‘tipping off’ offence (section 333).
AIA recommends all practising members regularly review AML Guidance for the Accountancy Sector, which has been compiled in conjunction with other professional body supervisors and approved for use by HM Treasury. (Explanatory notes)
The guidance is addressed to all entities providing audit, accountancy, tax, insolvency or related services in the United Kingdom (including firms providing trust or company services) by way of business, irrespective of membership of a recognised professional body and sets out how to fulfil your regulatory requirements surrounding AML.
A comprehensive risk assessment is key to understanding the money laundering (ML) and terrorist financing (TF) risks that a business is exposed to. By knowing and understanding the risks to which the accountancy sector is exposed, HM Government, law enforcement, and the professional body supervisors, as well as the accountancy firms themselves, can work together to ensure that criminals find it difficult to exploit accountancy services.
This document sets out key risks relevant to the accountancy sector – it is updated on a regular basis, reflecting the UK’s National Risk Assessment and other emerging threats and trends.
The risk of money laundering and terrorist financing is constantly evolving. Firms should regularly review official guidance to ensure they have identified all appropriate areas relevant to their own operations.
High Risk Jurisdictions
For additional guidance on high risk jurisdictions consult the Risk Outlook above.
Criminals employ a range of techniques to clean their “dirty money”. Professionals working in the accountancy, legal and property sectors are being targeted because of their expert skills and services (National Risk Assessment 2020), which can give a cloak of legitimacy to illicit cash. This gives professionals a crucial role to play in protecting the UK’s economy, and wider society by reporting suspicious activity.
If you suspect that money laundering may be taking place, you are legally obligated under the 2017 Money Laundering Regulations to submit a Suspicious Activity Report (SAR) to the National Crime Agency.
The sanctions regime and licensing exemptions may affect your business across different jurisdictions. The UK uses sanctions to fulfil a range of purposes, including supporting foreign policy and national security objectives, as well as maintaining international peace and security, and preventing terrorism.
Types of sanctions and licences
The UK may impose these types of sanctions measures:
trade sanctions, including arms embargoes and restrictions on dual-use items
financial sanctions, including asset freezes
immigration sanctions, known as travel bans
Some measures are targeted at designated (listed) individuals or entities:
asset freezes
travel bans
some trade and transport measures
Other measures apply to whole countries or regions:
arms embargoes
other export/import/trade controls
transport measures
wider financial measures
You may need to have a licence to comply with UK sanctions.
UK sanctions lists
The UK’s sanctions list is published by the Foreign & Commonwealth Office. The list contains all individuals, entities and ships specified/designated under Sanctions and Anti-Money Laundering Act (SAMLA) 2018. The list includes all those designated under the types of sanctions including financial, immigration, trade and transport.
OFSI Consolidated of financial sanctions target
The Office of Financial Sanctions Implementation which is part of HM Treasury issues a list of all those subject to financial sanctions imposed by the UK. This is known as the consolidated list.
Preparing for the end of the EU Transition Period
As set out in the Withdrawal Agreement, EU sanctions will continue to apply in the UK during the transition period until 11pm on 31 December 2020. UN sanctions will continue to be implemented through EU law during this time.
From 11pm on 31 December 2020 the UK will implement a range of UK sanctions regimes through regulations made under the Sanctions and Anti-Money Laundering Act 2018 (the Sanctions Act). The Sanctions Act provides the legal basis for the UK to impose, update and lift sanctions.
The UK’s legal framework for sanctions is changing:
The UK is transferring current EU sanctions measures into UK law, with the aim of delivering substantially the same policy effect.
If you undertake activity relating to a sanctioned country or entity, it is important that you read and understand the new UK regulations and guidance to ensure that you are still compliant.
If your proposed activity is prohibited by UK sanctions and there are no relevant exceptions, you should either apply/register for a licence or do not under the activity.
The structure of sanctions lists is changing:
Depending on the information you are looking for, you will either need to refer to the UK Sanctions List, which covers all sanctions made under the Sanctions and Anti-Money Laundering Act 2018, or the OFSI Consolidated List of Financial Sanctions Targets, which covers all financial sanctions designations.
If you check your customers or clients against sanctions lists, you should ensure that you are using the right list for your activity.
Some organisations may need to check both lists.
You should prepare for substantial changes to the data that is in both lists on the 31st of December, given that UK designations will be made under a new legal framework.
Current guidance and legislation on sanctions and compliance is available on the main UK sanctions gov.uk website page.
Licensing authorities
The licensing authorities are:
HMT Office of Financial Sanctions Implementation (OFSI) for asset freezes and other financial measures (OFSI@hmtreasury.gov.uk);
DIT Import Licensing Branch for import measures (ilb@trade.gov.uk)
DIT Export Control Joint Unit for export and all other trade measures (help@trade.gov.uk)
DfT Transport Sanctions team for transport measures (transportsanctions@dft.gov.uk)
Licensing purposes are set out in a schedule to the legislation for financial licenses and in the guidance for trade licenses.
After the end of the Transition Period, only licences granted by the UK are valid under UK sanctions legislation, and licences granted by the UK will not be recognised by the EU in respect of EU sanctions legislation.
Key points to remember
Sanctions exist– they can have a big impact on you and your business. For example, breaching financial sanctions is a criminal offence and can result in a civil monetary penalty being imposed on your business or you, with imprisonment of up to 7 years.
It is your responsibility to check whether individuals, organisations or countries that you are dealing with are impacted by the UK sanctions. You are expected to undertake due diligence that you know who you are dealing with, both directly and indirectly, for example, looking at ownership and control of an organisation.
You may need a licence. In certain circumstances, the government may grant a license to permit an activity that would otherwise be prohibited. It is up to the licensing authority to determine whether a licensing application is in line with the purposes. Some licenses require UN notification approval.
You must report any suspected or actual breaches of financial sanctions to OFSI. If you believe that you are dealing with an individual or organisation that is or was subject to sanctions at the time of the activity, you must free their funds and assets immediately, report this to OFSI, not deal with or make funds or economic resources available to them and not do anything that would circumvent the asset freeze.
AIA recognises that compliance can be cumbersome. In addition to ensuring that our members have access to the most up-to-date guidance and advice, all AIA members holding a valid practising certificate receive a discounted subscription to AMLCC.
AMLCC subscription provides firms with the essential tools needed to assess their clients through online reporting and record keeping as well as train their staff, this in turn gives reassurance to the AIA that AIA registered firms are meeting their statutory obligations and incorporating best practice into their work.
If you have misplaced your AMLCC discount code please contact membership@aiaworldwide.com to request a reminder.
You can view an introductory software tutorial here:
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR2017) requires all businesses acting as trust or company service providers (TCSPs) in the UK to be registered with HMRC where they are not already registered with the Financial Conduct Authority (FCA).
Firms that are not registered are not permitted under the MLR2017 to provide TCSP work.
MLR2017 REQUIREMENTS
Under MLR2017 a trust or company service provider is any firm or sole practitioner whose business is to:
form companies or other legal persons
provide a registered office, business address, correspondence address, administrative address for a company, partnership, other legal person or arrangement
act or arrange for another person to act as a:
director or secretary of a company
partner (or in a similar position) for other legal persons
trustee of an express trust or similar legal arrangement
nominee shareholder for another person, unless the other person is a company listed on a regulated market which is subject to acceptable disclosure requirements
A person is still considered to be a TCSP provider even if these services are provided incidentally to other accountancy services, or they are provided infrequently or on a one-off basis.
HMRC’s TCSP registration guidance provides further information on what constitutes a TCSP.
HMRC’S TCSP REGISTER
In order to maintain the TCSP register, HMRC has requested that AIA (along with the other professional body supervisors) to notify HMRC of all the firms that we supervise that perform TCSP work.
AIA adds relevant firm details to HMRC’s TCSP register based on your firm return information. The details on the register include:
the name of your firm or your name if you are a sole practitioner
the registered address of your firm
confirmation by the AIA that the beneficial owners, officers and managers are fit and proper.
You are not permitted to undertake TCSP work without prior registration.
MLR 2017 requires that AIA approve all beneficial owners, officers and managers (BOOMs) in firms that we supervise.
This approval process seeks to ensure that no BOOM has been convicted of a relevant offence as set out in Schedule 3 to the MLR 2017.
Amendments in the Money Laundering Regulations 2019 (MLR 2019) clarify that individuals seeking BOOM approval from supervisory bodies such as AIA must provide information which enables a supervisory body to determine whether the applicant has been convicted of a relevant offence.
Individuals who have an unspent relevant criminal conviction set out in Schedule 3 to the MLR 2017 cannot be approved by AIA as a member engaged in public practice. There is no right of appeal under the MLR 2017 and MLR 2019, although a person can re-apply once the conviction is spent.
The relevant convictions in Schedule 3 to the MLR 2017 are economic crimes such as:
fraud
bribery
dishonesty
tax offences
breaches of the money laundering regulations
Driving offences are not included in the list. Nonetheless, AIA members should be aware that some convictions that are not included within Schedule 3 may still lead to disciplinary action.
The Financial Action Task Force (FATF) is an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing. Its 40 Recommendations are backed by mutual evaluations of its member countries.
FATF has also issued other relevant and useful reports and guidance:
When you apply for, or renew, your practising certificate you agree to co-operate with AIA in our Quality Assurance and practice monitoring process.
AIA’s monitoring and supervision tests compliance with the AIA Constitution, Public Practice Regulations and legal and regulatory requirements such as the Money Laundering Regulations.
As part of AIA’s quality assurance programme members in public practice are subject to regular monitoring by trained reviewers, designed to ascertain the level of compliance with the above by enabling you to demonstrate that you have adequate policies and procedures in place.
AIA operates a risk-based approach to AML supervision and Quality Assurance monitoring.
MONITORING AND SUPERVISION TEAM
AIA’s Quality Assurance Advisers and AML Reviewers are experienced individuals who receive regular training, including up-to-date information on the domestic and international risks of money laundering and terrorist financing which affect the accountancy sector.
INVESTIGATION AND ENFORCEMENT
In any instance where AIA monitoring identifies non-compliant behaviour a referral may be made to the AIA Practice Compliance Committee (PCC).
The Sanctions Handbook provides a flexible and comprehensive framework to deal with non-compliance with the Regulations. There are no limits on the fines that the Committee can impose.
Outcomes from the PCC and Disciplinary Process may include:
Exclusion from membership
Removal of practising certificate
Unlimited fines
Public reprimands
Conditions (e.g. enforcement visit or additional training)
Failure to meet legal and regulatory obligations could have serious consequences. It is a criminal offence under the UK and Ireland regimes to fail to comply with your AML/CTF obligations.
If you come across an accountancy service provider (ASP), trust or company service provider (TCSP), high-value dealer or other firm that does not appear to be supervised under the MLR 2017 or appears to be ignoring the regulations, please consider contacting the relevant supervisory body and tell them what you suspect or if you can’t find the name of a known supervisor, please contact the HMRC MLR Registration Team
If you come across an accountancy firm or trust and company service provider that is supervised by AIA and appears to be ignoring the regulations, you can report it confidentiality to us. If information is provided to us on a confidential basis, we will take the appropriate steps to protect your identity.
So your information can be reviewed as quickly as possible, please provide as much information as possible using AIA’s.
Working with Regulators and the Accountancy Profession
OPBAS is a regulator set up by the government to strengthen the UK’s AML supervisory regime and ensure the professional body AML supervisors provide consistently high standards of AML supervision.
AIA also works in the public interest as part of the Accountancy AML Supervisors’ Group (AASG) working closely with HM Treasury, the Home Office and the National Crime Agency to represent members’ views and to communicate up-to-date information and guidance back to you.
The AASG is a sub committee of the UK Anti-Money Laundering Supervisors Forum (AMLSF), a forum in which professional bodies work collaboratively to develop supervisory policy to promote consistency in standards and best practice and receive AML intelligence from law enforcement agencies and the government.
AIA works in collaboration with law enforcement agencies, regulators and other professional body supervisors to share intelligence and actively combat money laundering and terrorist financing through the Accountancy Sector Intelligence Sharing Expert Group (ISEWG).
The information provided on this website is for guidance purposes only and is not a substitute for obtaining specific legal advice where appropriate. While every care has been taken with the preparation of the guidance, neither AIA nor its employees accept any responsibility for any loss or outcome occasioned by reliance on the contents.
AIA offers a qualification and membership pathway for everyone.
AIA also works in the public interest as part of the Accountancy AML Supervisors’ Group (AASG) working closely with HM Treasury, the Home Office and the National Crime Agency to represent members’ views and to communicate up-to-date information and guidance back to you.
AIA works in collaboration with law enforcement agencies, regulators and other professional body supervisors to share intelligence and actively combat money laundering and terrorist financing through the Accountancy Sector 
