Accountants are being warned to keep up to date with their Anti-Money Laundering (AML) compliance requirements to avoid falling foul of the law.
Among the new obligations for accountants to consider are rules introduced in the Economic Crime (Transparency and Enforcement) Act 2022 that require overseas entities owning property in the UK to identify their beneficial owners.
The UK government introduced the Register of Overseas Entities (ROE) in August last year, following Russia’s invasion of Ukraine in February 2022. The Register forms a key part of the government’s strategy to tackle global economic crime and requires overseas entities that own UK property or land to declare their beneficial owners or managing officers.
However, a recent report by researchers from the London School of Economics (LSE), the University of Warwick, and the Centre for Public Data, found that more than two-thirds of properties in England and Wales held by overseas shell companies still do not reveal who owns them.
The report, published on Sunday 3 September 2023, found that 109,000 out of 152,000 English and Welsh properties held by foreign shell companies do not publish information about their owners, despite government attempts to crack down on anonymous ownership of UK property.
Accountants undertaking verification check services must tread carefully to ensure that they comply with the relevant client due diligence (CDD) process. Regulatory body the Institute of Chartered Accountants in England and Wales (ICAEW) released guidance in August 2022 highlighting that the checks usually carried out to comply with AML regulations are not of the same standard required for verification.
The war in Ukraine has posed further problems for the accountancy sector which is also facing restrictions on services that firms can perform to persons connected to Russia.
In July 2022, the government introduced sanctions on certain services, including ‘accountancy services’, to Russian companies.
“An important matter for us currently is clients and individuals/entities connected to Russia,” said Tamara Howe, director of financial crime prevention at chartered accountancy firm HW Fisher.
“We have had to consider the services we are providing when people are connected to Russia and work out where the risks are in our client portfolios and disengage with clients where we may have been providing services to people we can no longer act for under the new restrictions placed on accountancy firms,” she said.
HM Revenue & Customs (HMRC) has a range of enforcement powers that it can use for businesses that do not comply with the Money Laundering Regulations, including civil penalties, criminal proceedings and removal from the register.
In June this year, HMRC said that it had fined 83 accountancy service providers (ASPs) a total of £600,000 for breaching anti-money laundering regulations between 1 July and 31 December 2022.
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