by John McCarthy Consulting Ltd. | Jun 18, 2022 | Blog, News
Question from a firm – I am the MLRO in our firm. I am not sure whether I must or cannot report a situation I have been made aware of. Our client came to Ireland some years ago and for a few months she was unemployed but lived in a hotel.
Our Tax Manager asked her how she managed to fund this and she mentioned an offshore bank account of which we were unaware. The Tax Manager explained that any income would need to be declared on her tax return and the client asked her to forget she had mentioned it as she didn’t want the Revenue to know about it because the money had come from a friend. The Tax Manager came and reported to me as the MLRO.
My understanding of the rules is that because we were not being asked to give legal advice or clarify the law, legal professional privilege doesn’t apply to us here, but this is an area about which I am not too familiar, so I am grateful for some advice.
Answer – You are absolutely correct in your understanding. You need to consider the original source of the information. In this case it arose from a routine question during normal compliance work and so is not covered by the privileged circumstances exemption from reporting in privileged circumstances (see more in Chapter 7 (paragraph 7.4) of the latest CCAB-I AML Guidance updated in March 2022. It seems clear that the client is evading tax, and since the information came to you in the course of a regulated business you must report it as a suspicious transaction report (STR) to the Garda and the Revenue Commissioners as money laundering.
The other issue is that you cannot submit a tax return that you know to be incorrect; otherwise you would be involved in an arrangement to help your client defraud the Revenue.
You also need to consider your ethical position. The Code of Ethics of all professional accountancy bodies will state something to the effect that you cannot continue to act for a client on tax matters where you know her tax affairs are deliberately misstated, other than to help regularise the situation. If the client persists in this position you will need to resign.
Had the client come to you and openly disclosed the offshore account and was willing to get her tax affairs regularised while asking for your advice on what she should do, then the information would have been received in privileged circumstances (see Section 46 of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021) and you would not be able to report. You would still be in the same position from an ethical standpoint.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Jun 10, 2022 | Blog, News
Question from a firm – When a client moves address, do you need to redo the Money Laundering (ML) verification checks?
Answer – You should obviously update your records and then consider, on a risk sensitive basis, what (if any) evidence you need to support the change (e.g. obtain copy of a utility bill for the new home address – preferably a physical utility like gas/electric/broadband, but not a mobile phone bill). For most clients I would have thought that routine correspondence and dealings with the client would provide sufficient evidence to corroborate the change.
Also bear in mind the need to verify that the related appropriate update has been made to the RBO register entries (which are actually the client’s responsibility). This applies where the client is a beneficial owner of either a limited company or an Industrial & Provident Society. Such updates must be made ‘in a timely manner’ according to SI 110/2019.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Jun 6, 2022 | Blog, News
Question from a firm – As a follow up to last week’s question about the temporary staff and contractors, that work for us perhaps only for a few weeks or a month or so. We ask them to read our in-house AML Policies Controls & Procedures Manual and view the training webinar including the quiz.
What if they ‘fail’ the test? Do we ask them to do it again until they ‘pass’?
Answer – Paragraph 8.5.2 of the latest March 2022 CCAB Guidance on AML states that training ‘records should show the training that was given, the dates on which it was given, which individuals received the training and the results from any assessments.’
If the temporary staff and contractors have already received adequate training in previous positions there is no need to retrain them.
Our recommendation would be that you ask them to carry out your quick multi-choice test on the AML legislation and CCAB guidance. If they obtain a satisfactory score, then keep the results on file with their names/signatures and the date they took the test, as evidence that they were already familiar with the requirements.
If they score badly, then they should be required to undertake the AML training and do a new test. If they still score poorly they should re-sit the test alongside someone who corrects them and explains the answers as they take the test. This should help ensure that they understood the reasoning behind the answers.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Jun 6, 2022 | Blog, News
Question from a firm – From time to time we have temporary staff and contractors, perhaps only for a few weeks or a month or so. We ask them to read our in-house AML Policies Controls & Procedures Manual and view the AML training webinar including the quiz. Are we being over-zealous by insisting on this?
Typically the level of client contact for temporary/contractor staff will be low, but they will take phone calls, see incoming correspondence/e-mails and so on. It is conceivable that they could be the first person here, or perhaps the only one, to become aware of a money laundering issue.
Answer -Section 54 of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 requires ‘persons involved’ to be given training. Section 54 (10) defines ‘persons involved’ as including ‘a reference to directors and other officers, and employees, of the designated person’ so that will include temporary/contractor staff. It is irrelevant whether they have face to face client contact or not.
The safest option would be to provide training to all employees including temporary/contractor staff as they may come across suspicious activity, in the course of their work that needs reported to the MLRO. It is best practice to retain records of the training including the materials used, the date, names/signatures of the attendees and the results of the quiz that helps prove their understanding of the topic.
For more on this topic see the newly created Chartered Accountants Ireland AML Technical Hub.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | May 27, 2022 | Blog, News
You are the MLRO for a firm of accountants. At a Chamber of Commerce dinner you were attending recently, a client you met there tells you that he is having an extension built onto his home. The contractors want payment in cash, which he says he suspects is because they will not be declaring it to the Revenue.
Do you have a duty to report this suspected tax evasion as money laundering, especially as the contractor has nothing to do with your firm?
The issue here is not that payment is in cash, but that the client has said he suspects tax evasion by the contractor. If the information comes to a relevant person (the MLRO in this case) during the course of his/her business, this must be reported.
The intention to commit a crime (in this case tax evasion) can itself be a crime, and although you do not know for a fact that the contractor intends to evade tax, it seems probable that he does.
Suspicion is enough (no proof is required from the MLRO’s point of view). You have obtained the information in the course of business, and it makes no difference that the person under suspicion is not actually your client.
You should not inform the client of your action, as this could constitute ‘tipping off’ or prejudicing the investigation according to Section 49 of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021. Your report to the Garda and the Revenue Commissioners (via the ROS portal) can name only your client: If the Garda/Revenue decide to investigate, they can ask for the information from your client.
For more on this topic see the newly created Chartered Accountants Ireland AML Technical Hub
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Apr 14, 2022 | Blog, News
A significant legislative change made five years ago will only impact affected companies this year. The amendment made by the Companies (Accounting) Act 2017 amended section 1274 dealing with unlimited companies (known as a ULCs).
‘Designated ULCs’ lose accounts filing exemption
Among other changes, certain types of ULC (known as ‘designated ULCs’) are required to file their accounts with the CRO (including group accounts where applicable) for the first time. While most changes in the law came into effect from 1 January 2017, this one was delayed until accounting periods commencing 1 January 2022.
The amended Section 1274 Companies Act, 2014 broadly states that for accounting periods commencing on or after 1 January 2022, a ULC that has been a holding company of an undertaking which was at that time limited must file financial statements along with their annual return for accounting periods commencing on or after 1 January 2022.
This applies across the board regardless of the size of the group as section 1274 does not have any exclusion clause that says the section disapplies sections 347/348 making the filing of annual returns/accounts compulsory.
ULCs may qualify for audit exemption
In a related point Section 1230 Companies Act, 2014 allows such designated groups, where they are private ULCs (provided they satisfy the ‘small’ company criteria) to claim audit exemption (assuming all the other criteria are satisfied – annual returns filed on time, no 10% shareholder objections etc., their constitution permits audit exemption etc. ) because the Table disapplying certain sections of the Companies Act, 2014 for ULCs does not disapply the audit exemption and ‘small’ company criteria for ULCs contained in Parts 1-14 of the Companies Act, 2014.
Filing Exemption Remains for non-designated ULCs
So-called ‘non designated’ ULCs under Section 1274, that do not have any limited liability subsidiaries and whose direct and indirect shareholders do not comprise solely of limited liability undertakings will continue to be exempt from the requirement to file their financial statements.
In other words where a company is a ‘pure’ unlimited company (i.e. there is no ultimate protection of limited liability in the group structure), it will still be possible to avail of an exemption from filing financial statements.
However, they will need to file an auditor’s report attached to the Annual Return which confirms that the auditors have audited the financial statements of the company for the relevant financial year in accordance with sections 336 and 391.
Are your AML Policies Controls & Procedures up to date?
We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
