UK accounting bodies ‘lax’ in scrutinising money laundering issues, 92% ‘fear’ losing members: Supervisor
15 Mar 2019

Professional accounting bodies in the United Kingdom are more focused on representing their members than robustly supervising anti-money laundering standards, the government’s AML supervisory unit said.

Its findings in a new report have revealed ‘poor standards,’ with an alarmingly high number saying they are worried about taking robust action.

“92% of accountancy PBSs [professional body supervisors] expressed concerns about taking robust action if this would damage their ability to attract or retain members,” said the Office for Professional Body Anti Money Laundering Supervision (OPBAS), which overseas 22 professional organisations, including accountancy and law bodies.

“We found that 86% of relevant PBSs preferred to offer support and guidance to members to improve their AML compliance over an extended period rather than issue penalties. One PBS had statutory restrictions on their fining power for AML breaches,” the report stated.

It also found that one in five supervisors (23%) had no form of supervision and around the same number (18%) had not even identified who they needed to supervise.

In addition, there was a lack of enforcement, or a reluctance to issue fines and penalties for AML failures.

“There has not been enough enforcement action. Last year, only 50% of professional bodies issued fines for AML failings. It was even less the year before (27%). This is hard to believe, given the high-risk activities of lawyers and accountants. We were told, particularly in the accountancy sector, that professional bodies believed their members would leave if they took robust enforcement action.”

The report highlighted serious shortfalls particularly within the accounting sector.

Alison Barker, FCA Director of Specialist Supervision, said: “The accountancy sector and many smaller professional bodies focus more on representing their members rather than robustly supervising standards. Partly because they don’t believe – or don’t want to believe – that there is any money laundering in their sector.

“Partly because they believe that their memberships will walk if they come under scrutiny. And second, this belief that that there isn’t any money laundering in their sector means intelligence isn’t being shared enough.”

When approached for a comment, accounting PBSs seemed at odds with OPBAS’ findings.

The Association of Chartered Certified Accountants (ACCA), said: “Whilst welcoming the report and acknowledging the findings, we are concerned that OPBAS has not adequately reflected the efforts made by supervisors in implementing significant process change in order to achieve full compliance with the Regulations.”

Duncan Wiggetts, Executive Director of Professional Standards at the Institute of Chartered Accountants in England and Wales (ICAEW) said: “We are disappointed that we were provided with no notice of this report being issued … we are also disappointed that the key findings are not ranked in importance and that the aggregation of results means that the reader may be left with the unfortunate and incorrect impression that ICAEW had significant failings in its own report when this would be far from correct.”

The Charted Institute of Taxation (CIOT) declined to comment.

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