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12 April 2016

Accountants urged to look for warning signs of money laundering

Content team

Accountants should always be on their guard when conducting anti-money laundering (AML) due diligence checks, staying vigilant to any "red flags" of suspicious activity, according to professional services provider BDO.

Writing in Accountancy Age, Angela Foyle, financial services partner at the firm, warned that it can be all too easy for professionals to become complacent when dealing with the financial affairs of their clients, particularly those they have worked with for a long time.

"As trained accountants, we are duty-bound to be thorough and diligent, and are committed to doing a good job," she writes.

"However, despite the profession recognising that money laundering is a serious issue, the fact that many accountants don't feel personally at risk may cause due diligence dedication to waver, particularly when we think we know a client well."

Ms Foyle highlighted a number of possible warning signs of money laundering, including inconsistencies in information provided and clients seeming evasive, or reluctant to give satisfactory answers to basic questions.

Requests that seem inconsistent with the client's profile could also be a red flag, along with complex group structures without proper explanations, or justifications such as 'tax reasons' or 'privacy funds'.

Emphasising how even the smallest lapses in due diligence can result in illegal activity going undetected, Ms Foyle referred to a case study used by SWAT, the training provider for the Institute of Chartered Accountants in England and Wales.

An accountant had been auditing a client for years and, feeling that he knew the company well, documented very little on AML checks, even though the firm was based in a country classed high-risk by HM Revenue & Customs.

It was only when, after some time, the accountant updated his customer due diligence and performed a sanctions check that he discovered signs of wrongdoing.

Accountants could face repercussions such as large fines, loss of licence or even a prison sentence if they become involved in money laundering, even if they do so unwittingly.

Content team, Bureau van Dijk

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