by John McCarthy Consulting Ltd. | Apr 4, 2022 | Blog, News
In recent blogs we looked at some examples of money laundering in practical day to day business life.
Here is another case study based on an example from the latest Consultative Committee of Accountancy Bodies (CCAB) AML Guidance released in early March 2022.
Your client plans to expand its operations into a new overseas area of operation. The client has engaged a consultancy firm to oversee the implementation, although it is not clear what the firm’s role is.
Payments made to the consultancy firm are large in comparison to the services provided and some expenses claimed are for significant sums to ‘meet government officials’ expenses’.
The country is one where corruption and facilitation payments are known to be widespread. You ask the FD about the matter and he thought that such payments were acceptable in the country in question.
What are one’s AML reporting duties in this situation?
- If you suspect that bribes have been paid – Report the matter as a suspicious money laundering transaction.
- If you do not suspect illegal payments – do not report.
The CCAB-I guidance goes on to clarify that money laundering offences include, in certain circumstances, conduct occurring overseas which would constitute an offence if it had occurred in Ireland.
Please note that few potential money laundering reporting scenarios are clear cut and legal and professional advice may be necessary to fully understand your reporting obligations.
Are your AML Policies Controls & Procedures up to date?
There are no excuses as 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. | Mar 21, 2022 | Blog, News
Following the recent CCAB-I Joint Statement to the Profession about sanctions, accountants must carry out checks on their clients’ potential exposure to sanctions, as part of AML processes and procedures. An important part of this process will be to check whether the accountant holds or controls any funds/economic resources for people or institutions affected by the sanctions.
The CCAB-I is the umbrella group for the accountancy bodies in Ireland and its latest pronouncement (only 5 pages long) emphasises that that these measures are directly relevant to both members in business and practice and the public sector as well as the charity and not for profit sectors. The Guidance contains links to the relevant sanctions lists and websites where further guidance is available.
Many of the sanctions will affect PEPs (Politically Exposed Persons) and people closely connected to them (including family members and business associates). Accountants need to have appropriate training and AML procedures for staff so that prior to approval of the business relationship they obtain senior management sign-off and then take sufficient measures to establish the source of wealth and funds; and perform enhanced ongoing monitoring (called Enhanced Due Diligence of EDD) of the relationship.
If funds connected to sanctioned institutions or individuals are held (e.g. in a clients’ money account), accountants are legally obliged to freeze such funds and any funds owned/controlled by such persons and must refrain from dealing with these assets or making them available (directly or indirectly) to persons/institutions on the sanctions list.
There is also an increased potential risk of money laundering among every client on an accountants’ client base, as individuals and businesses (directly or indirectly connected to such sanctions) try to evade the sanctions regimes and perhaps disperse funds/assets to other persons/institutions not currently on the sanction lists.
Another important matter in the Guidance is the potential impact the sanctions may have on the operation of exclusion clauses (if any) in professional indemnity arrangements. CCAB-I recommends that accountants check the current position with their providers.
The Joint Statement is available here.
The latest EU Sanctions list as of 15 March 202 is available here. Because this is a fast evolving situation, readers are advised to check the websites of your appropriate professional body and the European Union for further sanctions updates.
We have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
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. | Mar 15, 2022 | Blog, News
In several recent blogs we looked at some examples of money laundering in practical day to day business life.
Here is another one that is based on an example from the latest Consultative Committee of Accountancy Bodies (CCAB) AML Guidance released on 4 March 2022.
Your client has paid a dividend based on draft accounts. Subsequent adjustments reduce distributable reserves to the extent that the dividend is now illegal. Do I need to report this as a money laundering offence?
The answer is that whether it is money laundering or not will depend on the circumstances and the intentions of the Directors.
- Report as a money laundering offence – If there is suspicion of fraud.
- Do not report as a money laundering offence – If there is no such suspicion. It may be a simple error and will need rectified without delay.
The payment of an illegal dividend is not a criminal offence under the Companies Act.
Commentary
A company can only pay a dividend if it has sufficient ‘distributable profits’ (as defined) available for distribution. Sections 124 and 125 of the Companies Act, 2014 are the principal sections that deal with declaring dividends and the Directors ought to prepare calculations in advance, based on the company law requirements, to ensure they are calculated from profits that are available for distribution, as defined in Section 117. If a dividend is declared unlawfully the directors are potentially liable to repay it to the Company.
Please note that potential money laundering reporting scenarios are not usually clear cut and legal and professional advice may be necessary to fully understand your obligations. There is a significant technical document available on the ICAEW website, Tech 02/17BL, which, although based on the UK Companies Act, 2006, would be persuasive under Irish company law, as GAAP in both Ireland and the UK is the same (at least for now) and both countries have the same accounting frameworks with similar underlying legal principles.
We have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
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. | Mar 14, 2022 | Blog, News
In several recent blogs we looked at some examples of money laundering in practical day to day business life.
Here are some more examples from the latest Consultative Committee of Accountancy Bodies (CCAB) AML Guidance released on 4 March 2022.
Some customers of your client have overpaid their invoices. The client retains overpayments and credits them to the profit and loss account. Do I need to report this as money laundering or not?
Obviously the circumstances can vary and the CCAB guidance is not to be interpreted as giving legal and definitive advice. The scenarios outlined a merely there for the purposes of illustrative guidance and for educational purposes.
The circumstances will influence whether to report this matter for money laundering purposes or not.
Report the matter if you:
- know or suspect that the client intends to dishonestly retain the overpayments. Reasons for such a belief may include:
- The client omits overpayments from statements of account.
- The client credits the profit and loss account without making any attempt to contact the overpaying party.
You may not need to report the matter if you:
- believe that the client has no dishonest intent to permanently deprive the overpaying party. Reasons for such a belief may include:
- Systems operated by the client to notify the customer of overpayments.
- Evidence that requested repayments are processed promptly.
- Evidence that the client has attempted to contact the overpaying party.
- The client has sought and is following legal advice in respect of the overpayments.
These situations are not usually clear cut and legal and professional advice may be necessary to fully understand your obligations.
We have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
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. | Mar 7, 2022 | Blog, News
On Friday 4 March 2022 the Consultative Committee of Accountancy Bodies in Ireland (CCAB-I) issued updated guidance applicable to accountants in practice for immediate use.
The Guidance is a widely respected and hugely valuable document among accountants as it sets out the minimum criteria that must be adhered to in order to comply with the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 (‘the Act’) in the Republic of Ireland.
Key changes in the legislation are reflected in additional guidance in areas such as:
- Greater emphasis on identification of beneficial owners of businesses;
- Expanding the definition of tax adviser, letting agent and intermediaries at art auctions;
- The definition of a Politically Exposed Person (PEP) to include any individual performing a prescribed function;
- There is a specific list of enhanced due diligence measures that the designated person is required to apply when dealing with a customer established, or residing, in a High-risk third country;
- The new requirement in place since 23 April 2021 that prior to commencing a business relationship is established, reasonable steps must be taken to verify the beneficial ownership of corporate clients including confirming the beneficial ownership with the relevant Central Register. Where a Designated person identifies a ‘discrepancy’ (as defined) in the Act, i.e. where the entry is inconsistent or incorrect between its own records and those maintained by the Central Register, it must notify the relevant Registrar.
- There is a similar requirement to notify the relevant Registrar where there is evidence of ‘non-compliance’ (as defined) in the Act, i.e. where the register is blank, it must notify the relevant Registrar.
A copy of the guidance may be accessed here.
Specially tailored up to date AML Training that meets the requirements of the legislation is available on request, on Zoom, in person or as a hybrid event, with a free video recording supplied afterwards, for future viewing. Contact john@jmcc.ie for further details.
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.
We also have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
by John McCarthy Consulting Ltd. | Feb 21, 2022 | Blog, News
Have you checked what companies are registered at your office address, lately? Well, maybe now is a good time!
Police sometimes describe the practice by which drug dealers take over someone’s home (often a vulnerable person) as a base for their activities as ‘cuckooing’. It now appears that this phenomenon has ‘come home to roost’ in some accountancy firms – at least in the UK.
According to a 2021 report in the SARS in Action magazine of the National Crimes Agency the new style of cuckoo uses an accountancy firm’s address as a registered office address without the knowledge or consent of the firm.
The most likely explanation for using the accountancy firm’s address is that it provides credibility which may be used to facilitate fraud. In many cases, the company will combine using the address with a Post Office redirection arrangement so the accountancy firm will not receive any mail which might trigger an investigation.
And it gets worse. Sean Kavanagh from leading company formation agency, Company Formations International in Ballsbridge explains that it is impossible to have a fraudulent Registered Office removed from your address as the CRO do not have any legislative basis for doing so, and therefore don’t.
CRO personnel went before the Oireachtas Committee for Enterprise, Trade and Employment to discuss this and other anomalies including full blown identity theft in December 2021. We still await some positive developments from this meeting.
You have been warned!
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.
We also have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
