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Comment: What accountants must do to avoid money laundering accusations

With the Treasury warning about accountants’ vulnerability to money laundering, Aziz Rahman, senior partner and founder of serious fraud specialists Rahman Ravelli examines what accountants can do to protect themselves.


Accountants must be aware that the Treasury is concerned that accountancy services appeal to money launders as they can help them gain legitimacy, create corporate structures or transfer value. In its second national risk assessment (NRA) of money laundering and terrorist financing in the UK, it says there is the possibility that negligent or unwitting accountants are risking involvement in money laundering.

The NRA goes as far as to say: “Some of those accountants involved in money laundering cases are assessed to be complicit or wilfully blind to money laundering risks, though the majority of these cases are likely to involve criminal exploitation of negligent or unwitting professionals.’’

Quite how accurate the Treasury’s claims are is debatable. It is hard to believe that there are many accountants who are prepared to either help those looking to launder the proceeds of crime or “turn a blind eye’’ to laundering. As for accountants being negligent or unwitting, these are descriptions which surely cannot apply to many in the accountancy profession.

It is important accountants implement strict procedures to help recognise potential laundering and ensure they react to it in the appropriate way. Failure to do this can be immensely damaging to an accountant’s reputation, professional standing and earning prospects not to mention putting them at risk of a criminal prosecution.

Accountants are qualified professionals who are expected to uphold certain working standards. The Code of Ethics of the ICAEW (The Institute of Chartered Accountants in England and Wales) expects accountants to demonstrate the highest standards of professional conduct and to take into consideration the public interest.

It emphasises that ethical behaviour by accountants plays a vital role in ensuring public trust in financial reporting and business practices and is crucial to upholding the reputation of the accountancy profession.

Having signed up to the Code, I would argue that the vast majority of accountants are aware of their duties and fulfil them competently and honestly. Yet, under the Proceeds of Crime Act 2002 (POCA), penalties of up to 14 years in prison can be handed down for money laundering. With that in mind, accountants must be focused and aware of the risks of money laundering.

Accountants are likely to be among the first in a company to have the opportunity – some may call it a responsibility – to identify money laundering. They have to know what it is, what the signs of it are and what they should do if they spot those signs.

At any firm, it is vital accountants take heed on advice that is given to them from solicitors. They cannot afford to function without appropriate procedures to prevent money laundering. Without such procedures, an accountant’s reputation, ability to practise and even their liberty can be at risk.

Money laundering is the disguising of the origins of money so it cannot be identified as the proceeds of crime. Money can be self-laundered, which is where a person launders their own criminal proceeds. It can also be laundered by someone on behalf of another person. These are both offences under POCA and both carry the maximum 14-year prison sentence.

Section 327 of POCA makes it an offence to conceal, disguise, convert, transfer or remove criminal property from the jurisdiction. Section 328 makes it an offence to enter into or become concerned with an arrangement to acquire, retain or use the proceeds of crime. There is also the offence of having possession of criminal property, which comes under Section 329 of the Act.

Accountants have to be equally mindful of sections 330 to 332 of POCA, which make it an offence to fail to disclose any knowledge or suspicion of money laundering. These relate to the legal obligation to disclose the identity of a suspect, any knowledge or suspicion they have of money laundering and the possible whereabouts of money or other assets that are being, or have been, laundered. Similarly, the Money Laundering Regulations place a duty on accountants to make an “authorised disclosure’’ of any money laundering suspicions under section 338 of POCA.

None of these offences will involve law-abiding accountants who are diligent when it comes to looking out for money laundering. But the position that accountants occupy in a company means that they can never afford to be ignorant of the potential for money laundering or of POCA.

They have to have an awareness of the relevant legislation. If they feel this is beyond them, they need to seek immediate legal advice from specialists in this area.

Accountants and the companies they work for must have procedures in place that prevent, or at least deter and identify, money laundering.

Such procedures can be fine-tuned to the individual business. But whatever sector a company is working in, it has to be able to make thorough checks on the identity of customers and clients, establish the real beneficiaries of a deal and pinpoint the precise status of everyone in the business relationship.

With the role of the accountant being central to the movement of money in any organisation, they need to be capable of examining each and every transaction for signs of money laundering. This is the case whether the accountant is a full-time member of staff or a hired hand called in to “do the books’’.

Each accountant’s situation may be slightly different from the next when it comes to working arrangements. But all face the risk of money laundering. And none can afford to be unaware of that risk.

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