by John McCarthy Consulting Ltd. | Aug 23, 2022 | Blog, News
Do you have clients with property interests in the UK, or who are about to acquire or recently sold property there? If you do, then you and your clients will need to know much more about a new piece of UK legislation designed to tackle money laundering.
With effect from 1 August 2022 any overseas entity that wants to buy, sell, or transfer property or land in the UK, (i.e. freehold estates or a lease granted for a term of more than seven years) must register with UK Companies House. They must declare who their registrable beneficial owners or managing officers are before 31 January 2023. Entities that disposed of property or land after 28 February 2022 will also need to register and give details of that disposal.
The Economic Crime (Transparency and Enforcement) Act 2022 provides the legislative background to this new requirement. This legislation creates the Register of Overseas Entities.
The procedure for making registration applications is set out in the Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022 and the rules around verification are contained in the Register of Overseas Entities (Verification and Provision of Information) Regulations 2022 (2022/725).
The requirements for registration apply to property acquired in:
- England and Wales, since 1 January 1999;
- Scotland, since 8 December 2014 and
- Northern Ireland, since 1 August 2022.
Overseas entities that currently hold qualifying property have six months from 1 August to register with Companies House. Failure to register is a criminal offence.
The Department for Business, Energy and Industrial Strategy (BEIS) has produced some guidance for those who may undertake verification on behalf of an overseas entity.
Accountants take care
According to the ICAEW and the UK Law Society, because of the potential liabilities for incorrectly carrying out verification checks, it is critical for any accountants seeking to carry out this service for a foreign entity that they fully understand that the client due diligence (CDD) process usually carried out to comply with anti-money laundering regulations is not of the same standard required for verification of ownership of Overseas Entities.
The BEIS guidance highlights that “there are differences between what’s required under the UK Money Laundering Regulations (MLRs) by way of client due diligence and what is required by way of verification under the 2022/725 Regulations. As such, a relevant person cannot only do what they would normally do under the MLRs and as set out in related industry guidance. Relevant persons should refer to the Act, the 2022/725 Regulations and this guidance when conducting verification checks.”
The ICAEW has said ‘If a professional accountant undertakes verification and does not carry out the process correctly, then they open themselves up to criminal prosecution, regulatory sanctions, and liability for professional negligence.’
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. | Aug 10, 2022 | Blog, News
The Companies (Corporate Enforcement Authority) Act 2021 was commenced on 6 July 2022, apart from Section 35. One of the principal aims of the act was to allow for the set up of the Corporate Enforcement Authority that replaces the Office of the Director of Corporate Enforcement (ODCE).
Section 35 of the Companies (Corporate Enforcement Authority) Act 2021 amends the Companies Act 2014 by inserting a new section 888A.
This section requires a director to include their personal public service number (PPSN) in an application to:
- incorporate a company;
- file an annual return (B1) made by a company of which he or she is a director; and
- file a notice of change of directors or secretaries (B10) made by a company of which he or she is a director.
The Registrar of Companies shall determine the Director’s identity information to be provided where the director has no PPSN. Non-compliance will constitute a Category 4 offence.
It is expected that this section will commence in early 2023.
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. | Jul 24, 2022 | Blog, News
According to the Financial Action Task Force (FATF) the definition of a Trust and Company Service Providers (TCSP) is a business, that provides any of the following services to third parties:
- Acting as a formation agent of legal persons Acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;
- Providing a registered office; business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;
- Acting as (or arranging for another person to act as) a trustee of an express trust or performing the equivalent function for another form of legal arrangement;
- Acting as (or arranging for another person to act as) a nominee shareholder for another person.[1]
The above FATF definition of a ‘TCSP’ excludes providers of TCSP services within financial institutions, law firms, notaries, other independent legal professionals and accountants, who will be separately regulated within their own professions.
The Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 (the Act), requires TCSPs to help prevent money laundering or terrorist financing and register as designated persons with the AML Compliance Unit of the Department of Justice. They must also apply Customer Due Diligence (CDD) to all their transactions including the retention of certain customer identity documents, verify client data with the RBO register, maintain an AML Policies & Procedures Manual and provide staff with regular AML training.
There are currently around 380 TCSPs registered with the Department of Justice AML Compliance Unit and the latest list of registered TCSPs as of June 2022 may be viewed here.
[1] FATF ‘Guidance For A Risk-Based Approach for Trust and Company Service Providers’ (June 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. | Jul 13, 2022 | Blog, News
High Value Goods Dealers (HVGDs) are businesses involved in the sale of goods of high value where the trader accepts cash payments of €10,000 (the current ‘high value’ threshold) either in one transaction or a series of linked transactions. Examples of these businesses include jewellers, antique dealers, boat and car sales and dealers in precious stones.
The Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 (the Act), place legal obligations on HVGDs to help prevent money laundering or terrorist financing.
HVGDs could be used to conceal the proceeds of criminal activity or for the purpose of evading tax. Under the Act, a HVGD is referred to as a ‘designated person’. A designated person is obliged to guard against their business being used for money laundering or terrorist financing purposes.
HVGDs must register as designated persons with the AML Compliance Unit of the Department of Justice and must also apply Customer Due Diligence (CDD) to all cash transactions of €10,000 including the retention of certain customer identity documents, have an AML Policies & Procedures Manual and provide staff with regular AML training.
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. | Jul 1, 2022 | Blog, News
Question from a firm – During the audit of a waste disposal company it has been drawn to my attention by the Audit Senior that the company has not renewed its waste disposal licence which is not a material amount. Is this something that we need to act upon?
Answer – ‘Money laundering’ is defined very widely in Section 7 of the 2010 Act (the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021). It includes all forms of
- Handling;
- Disguising;
- Layering;
- Transferring; or
- Possessing
the proceeds of criminal conduct. i.e. for the matter to be money laundering there must be two elements:
- ‘criminal conduct’ and also
- ‘proceeds of criminal conduct’.
The ‘proceeds of criminal conduct’ is defined in Section 6 of the 2010 Act and means any property that is derived from or obtained through criminal conduct, whether directly or indirectly, or in whole or in part…’. Proceeds’ may take any form, including (in this example) illegitimate saved costs – such as not paying a licence fee that the client is obliged to pay.
It will depend on the events that led to the licence falling into arrears and how long a period of time the licence has been allowed to lapse. Where the circumstances indicate that the non-renewal of the licence was deliberate, this is a reportable money laundering offence. More on this is available in Chapter 2 of the latest CCAB-I AML Guidance updated in March 2022.
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 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.
