by John McCarthy Consulting Ltd. | May 20, 2024 | Blog, News
The February 2023 issue of CA Magazine outlines some red flags of money laundering. Here we list six warning signs, adapted from that article, that accountants cannot afford to ignore.
- Evasiveness or unexplained spike in income: A client exhibiting evasive or nervous behaviours could indicate suspicious activity. Likewise, if turnover has doubled or tripled, with no explanation, it’s a red flag. Some clients may also find themselves being used as “money mules”, targeted by criminals using their bank accounts to help move stolen money.
- Clients in high-risk countries: Sanctions now prohibit firms from offering accountancy and consulting services to businesses linked to Russia and its ally Belarus, following the Ukraine invasion. While most accountants will be aware of this (along with sanctions against North Korea and Iran), the Government also urges the regulated sector to apply enhanced customer due diligence when dealing with around 30 other high-risk jurisdictions, including the Philippines, the UAE, and Barbados.
- Cash-based businesses: Businesses that deal primarily in cash are usually high risk. If you want to onboard a cash-intensive business, you need to monitor it more closely.
- A client with frequent changes of accountant can be another red flag.
- An unusual date of birth for a Beneficial Owner: A Beneficial Owner must be disclosed on RBO records, which should mean that the company owner can’t hide their identity should they be looking to transfer illegal assets via a shell company. Not all Beneficial Owners are in fact real. For example, in the UK there are more than four million businesses on the Companies House register, but around 4,000 people aged two or under apparently own some of these companies, according to a 2018 report from anti-corruption group Global Witness. It is also important to watch out for typos, as some criminals deliberately misspell their name multiple ways to thwart data searches.
- A client using an SLP or NILP: Scottish limited partnerships (SLPs) were originally established in the early 1900s for farm holdings, but the business structure has seen a 21st Century revival with criminals using them as shell companies. Following adverse media attention this criminal activity has moved onto NILPs (Northern Ireland Limited Partnerships) instead.
Accountants ought to be able to recognise these signs of money laundering to help safeguard financial systems and preserve the integrity of financial transactions.
To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.
All our CPD courses are listed here, including our Audit Update webinar.
Please go to our website to see our:
- Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) — View the Table of Contents here.
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- Letters of engagement and similar templates. Please 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.
- ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
- We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
by John McCarthy Consulting Ltd. | May 18, 2024 | Blog, News
The February 2023 edition of CA Magazine, identifies various types of accountants who may be at risk of becoming entrapped in financial crime. Here we have (adapted from that article) a list of four of the characteristics of those accountants:
- The overworked sole practitioner—Sole practitioners are under more pressure to get things done by themselves, which presents challenges for compliance.
2. The accountant with the “tick box” attitude—These accountants view compliance merely as a tick-box exercise; however, the compliance process must be in-depth and have proper risk assessments. The “tick box” attitude can also happen to accountants who have clients they know well or clients they’ve had for many years, and do not keep up with the required due diligence
3. The accountant who doesn’t probe hard enough when unearthing something suspicious—Some accountants may not want to investigate further when they see something which might be an issue. Accountants generally need to exercise more robust professional scepticism.
4. The small practice approached by a big-shot overseas client—Overseas clients often deliberately target small practices and offer them higher fees (and even offer to pay up front), often hooking accountants who then find it difficult to disentangle themselves with their AML systems already compromised.
Awareness of these characteristics can help accountants be on guard against falling into economic crime.
To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.
All our CPD courses are listed here, including our Audit Update webinar.
Please go to our website to see our:
- Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) — View the Table of Contents here.
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- Letters of engagement and similar templates. Please 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.
- ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
- We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
by John McCarthy Consulting Ltd. | May 18, 2024 | Blog, News
The scenario: Your firm has had a poor outcome from a recent AML Inspection and urgent remedial action is required.
You may have received a list of significant AML Compliance failings from your professional body which you are required to address within a defined timeline. Sometimes these failings are accompanied by additional points to be addressed before the next review.
The following six items need to be implemented as soon as possible:
Do:
- Promptly acknowledge receipt of the correspondence.
- If you think you are going to need more time to respond, contact the reviewer immediately and ask for the additional time you need. (You will only get one chance to make this request, and be sure to do so well before the time limit expires.)
- Consider carefully whether you need to obtain external assistance to deal with the matters, especially if:
- You are not confident of your understanding of AML requirements
- The reviewer has indicated that disciplinary proceedings are a possibility
- You consider the reviewer’s comments are unfair or unreasonable
- Stand back and consider whether the firm’s entire approach to AML Compliance needs a re-think, including your firm’s use (or lack thereof) of an AML Compliance package
- Carefully study the reviewer’s criticisms and address them comprehensively in your response, including (if appropriate), revised versions of documents such as the firm’s:
- Ensure that all responses are factually correct and meticulously accurate.
DON’T
- Delay in responding to the review – be proactive.
- Criticise the reviewer’s approach or lack of understanding of your firm – instead take a positive approach and send the reviewer additional information to be considered in support of your case.
Overall, be positive and proactive for a much more successful outcome.
To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.
All our CPD courses are listed here, including our Audit Update webinar.
Please go to our website to see our:
- Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) — View the Table of Contents here.
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- Letters of engagement and similar templates. Please 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.
- ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
- We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
by John McCarthy Consulting Ltd. | Apr 17, 2024 | News
If you have an upcoming AML Compliance Review from your professional body, be sure to follow these six essential steps to prepare.
- Ensure that you have an appropriate Policies & Procedures document and a Firm-Wide Risk Assessment accompanied by a note of annual reviews of and amendments to the assessment.
- Ensure that relevant staff have received money laundering training accompanied by a record of training completion.
- Carry out some test checks of records of your client Risk Assessments and Client Due Diligence documentation to assess whether the firm’s Policies & Procedures are being properly implemented.
- Check whether an external AML Compliance Review beforehand might be beneficial.
- Check that the information held by your supervisory body about the firm and its MLRO are up to date and correct according to the firm’s most recent Annual Return.
- Ensure that all the work which the firm is doing is correctly licensed under the terms of the firm’s authorisation from your supervisory body (e.g. insolvency work and Clients’ Money).
Following these six steps will ensure that your firm is well prepared for its AML Compliance Review.
All our CPD courses are listed here, including our Audit Update webinar.
To hear more about the latest AML developments and how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, see our latest Anti-Money Laundering webinar here.
Please also go to our website to see our:
- Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- letters of engagement and similar templates. Please 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.
- ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.
- We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
by John McCarthy Consulting Ltd. | Jul 30, 2021 | Blog, News
The various professional bodies are ramping up their anti-money laundering (AML) inspection regime, as there is more and more pressure coming at EU level, on professional bodies, to improve the consistency of the inspection system.
The main issues that are arising for Irish firms on recent AML inspections are:
- Lack of written procedures which evidence that firms are complying with AML regulations and legislation. These procedures ideally consist of an up to date AML Policies & Procedures Manual. Many firms have such policies and procedures already in place, but they are often out of date and do not clearly identify the MLRO. The latest changes to legislation came into effect on 23 April 2021 and the up to date AML Policies & Procedures Manual in use in the firm should reflect this.
- Client due diligence (CDD) – this consists of the following parts:
- Client verification – the ID obtained has not been signed and dated by the firm to evidence that they are ‘Certified Copies of the Originals’.
- Details of the client’s business, legal structure, sources of funds and geographic risks are often not properly recorded.
- Risk assessment and CDD procedures are not carried out prior to acting for the client.
- Firm-Wide Risk Assessment (often referred to as the Business-Wide Risk Assessment) – there is often little evidence that this written assessment (introduced in law since November 2018) has been completed or where it has been completed, the assessment is often not sufficiently detailed or up to date in accordance with Section 30A of the ‘Criminal Justice (Money Laundering and Terrorist Financing) Acts, 2010 to 2021’
- AML Compliance Review – Annual compliance review not completed or a inadequate review has been carried out. The review findings and implementation plan are extremely important. We carry out such external documented reviews for firms with advice on corrective action.
- Training – Appropriate AML training has not been undertaken by all relevant staff. We provide in-house and online AML Training delivered in a format tailored to each firm’s requirements.
- Annual Return declarations – Incorrect AML information disclosed on the firm’s Annual Return to its professional body. Attention to detail is important here and this will be reviewed as part of the AML Compliance Review we carry out.
