by John McCarthy Consulting Ltd. | Mar 2, 2023 | News
The Financial Times reported in late February 2023 on a classic example of CDD (Client Due Diligence) gone wrong, or more likely ‘Careless Due Diligence’.
As part of the required anti-money laundering (AML) checks, before taking their new client in 2021, the London Law firm, Discreet Law, requested identification documents from Yevgeny Prigozhin, who is the founder of the Wagner mercenary group. His name is on the sanctions lists of individuals accused of human rights abuses since 2018.
In response, Mr Prigozhin’s Russian lawyers forwarded a copy of his passport and a gas bill in the name of his then 81 year old mother, Violetta, for an address in St Petersburg, Russia.
Apparently the law firm were happy with the explanation that the bill was issued in the name of the claimant’s mother (Violetta Prigozhin) who actually lives at the client’s residential address and pays the bills. Her name has been added to the list of sanctioned individuals for her support of her mercenary son.
In March 2022, one month after Russia’s full-scale invasion of Ukraine, the firm applied to stop representing him.
The moral of the story is that each firm when carrying out CDD must ‘take reasonable steps’ as set out in Section 33 (5) of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021which includes verifying that the utility bill is correctly in the name of the individual concerned and that the address is their normal residential address.
PS – the above image is a stock photo and not known to resemble Mrs. Prigozhina.
Have you sourced all the Supplier Quality Statements you need? In case you ask, here is the one from John McCarthy Consulting Ltd.
ISQM Toolkit training
The ISQM TOOLKIT 2022 is self-explanatory and is available to purchase here.
This is the first time for adoption of this new standard and the various professional bodies have already commenced carrying out spot checks on firms and their implementation of this standard.
We are running a series of one to one private Zoom sessions to explain how it all works in a structured 1hour CPD session on Zoom with a free recording.
In addition, there is a half-day follow-up where we go through the actual Toolkit itself in a 4-hour session to document your risks and responses. We can also proof your final toolkit with suggestions for improvements. Contact john@jmcc.ie for more details.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- 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.
by John McCarthy Consulting Ltd. | Feb 25, 2023 | News
As of 4 June 2022, (under EU sanctions) it is prohibited to provide, directly or indirectly, accounting, auditing, including statutory audit, bookkeeping and tax consulting services, as well as business and management consulting or public relations services (Article 5n of Council Regulation 833/2014) to the Russian government, as well as to legal persons such as companies and other entities or bodies established in Russia.
Trying to assess the implications of the increasingly complex and varied sanctions regimes imposed on Russia (and on certain other countries/individuals and entities around the world) is already a huge headache. Some would say it’s not worth the effort. The compliance cost alone, plus the potential for getting the risk assessment wrong, versus the benefit of taking on a ‘risky’ client is too high.
It’s highly recommended that each firm carry out a complete sweep of all existing clients including those clients’ suppliers/customers (not just with the firm’s new clients) to verify whether there are any connections with Russia or with individuals/entities resident there.
Commencing in March 2022 the Big 4 accounting firms announced their withdrawal from Russia and with the war with Ukraine passing its first anniversary, it doesn’t look like this conflict will be resolved any time soon.
For quick access to the main Sanctions lists, please click on the following links:
Have you sourced all the Supplier Quality Statements you need? In case you ask, here is the one from John McCarthy Consulting Ltd
ISQM Toolkit training
The ISQM TOOLKIT 2022 is self-explanatory and is available to purchase here.
This is the first time for adoption of this new standard and the various professional bodies have already commenced carrying out spot checks on firms and their implementation of this standard.
We are running a series of one to one private Zoom sessions to explain how it all works in a structured 1hour CPD session on Zoom with a free recording.
In addition, there is a half-day follow-up where we go through the actual Toolkit itself in a 4-hour session to document your risks and responses. We can also proof your final toolkit with suggestions for improvements. Contact john@jmcc.ie for more details.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- 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.
by John McCarthy Consulting Ltd. | Feb 17, 2023 | News
Our blog last week, about Ireland’s Golden Visa programme was quite timely. It dealt with the Government’s controversial scheme to attract overseas investors to Ireland.
On 15 February the Government closed access to Ireland’s so called ‘Golden Visa’ scheme, which in 2022, attracted 1,275 applications from China and 41 from the rest of the world. The official title of the programme is the ‘Immigrant Investor Programme’ (IIP). For AML purposes, such investors must be classified as ‘high-risk’. We understand that applications that had been made prior to 15 February 2023 will still be dealt with on a case-by-case basis.
According to an Irish Times report some of the beneficiaries of the IIP programme included Trinity College Dublin, housing charity iCare, the GAA and Dundrum South Dublin Athletics Club, which alone received €9.36 million in IIP contributions.
ISQM Toolkit training
The ISQM TOOLKIT 2022 is self-explanatory and is available to purchase here.
This is the first time for adoption of this new standard and the various professional bodies have already commenced carrying out spot checks on firms and their implementation of this standard.
We are running a series of one to one private Zoom sessions to explain how it all works in a structured 1hour CPD session on Zoom with a free recording.
In addition, there is a half-day follow-up where we go through the actual Toolkit itself in a 4-hour session to document your risks and responses. We can also proof your final toolkit with suggestions for improvements. Contact john@jmcc.ie for more details.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- 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.
by John McCarthy Consulting Ltd. | Feb 9, 2023 | News
In recent days there has been some adverse media attention about Ireland’s Golden Visa programme, which in 2022, attracted a total of 1,316 applications. All but 41 of these came from China.
The official title of the programme is the Immigrant Investor Programme which offers residency in the State to non-Europeans, when they can prove they have personal wealth of at least €2 million. In return the are required to either:
- invest €1 million in an Irish business or
- make a €500,000 charitable donation or
- donate €400,000 in certain other cases.
Under current Irish AML legislation, the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021, states that such investors are potentially ‘higher risk’ for AML purposes.
Higher risk clients trigger additional AML scrutiny known as ‘Enhanced Due Diligence’ (EDD) and the 10 most important Due Diligence steps to take are as follows:
- Additional background checks: These checks are accompanied by a more in depth investigation into the customer’s background.
- Source of funds and wealth: Investigate the funds to be used throughout the business relationship and the client’s total wealth, supported with documentary evidence, ideally sourced from independent credible sources.
- Independent verification: Seek independent verification of the customer’s identity documents and establish the integrity of any other supporting information provided.
- Increased monitoring: Increase the frequency and intensity of transaction monitoring to detect any suspicious activity as soon as possible.
- Third party validation: Obtain information from third party sources, such as credit reference agencies to verify the customer’s information and help better assess the risk.
- Obtain senior management approval: In the case of Politically Exposed Persons (PEPs) and similar cases, as Irish law requires, as well as reviewing the latest sanctions lists. It is important for senior management to understand the risk an entity undertakes.
- Limiting transactions: In certain circumstances, restrict the type and size of transactions the customer can conduct, or limit their access to certain services that your firm provides.
- Incoming funds: Require that the initial funds and the first transaction to be conducted through a financial institution attracts more intensive AML supervision.
- Ongoing customer reviews: Increase the frequency of subsequent customer reviews.
- In extreme cases: Choose to refuse the business with the customer if the risk of money laundering is too high and beyond your firm’s risk appetite.
After all the above, Each firm needs to assess, on an ongoing basis, whether it is really worthwhile dealing with such clients, given the costs of getting the AML risk assessment wrong, versus the benefits of being involved in such transactions.
For those of you still in the process of ISQM 1 implementation, please see our new ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please call or e-mail John McCarthy FCA or e-mail him at john@jmcc.ie.
We typically tailor training and brainstorming sessions to suit your firm’s unique requirements.
Publications and AML webinar:
- The ISQM TOOLKIT 2022 is available to purchase here.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- 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.
