ICAS Issues Warning to Small Firms
In an article published by Business and Accountancy Daily, serious concerns have been raised over the number of small accountancy firms failing to identify client risks or perform adequate client due diligence checks on new customers. Fundamental requirements under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and The Money Laundering and Terrorist Financing (Amendment) Regulations.
Several key issues were raised following a firm-wide money laundering risk assessment thematic review conducted by ICAS, which analysed the performance of 10% of smaller firms under its supervisory framework. Some of the core issues included:
- Insufficient customer due diligence (CDD) procedures
- Inadequate client risk assessments
- Missing source of funds checks
- Poor record-keeping
- Limited staff training
- Failure to escalate suspicious activity
- Confusion regarding clients with overseas connections
While this review centred around Scottish firms, there have been industry-wide pressures from all regulatory bodies due to the number of businesses failing to meet their regulatory obligations.
Source: Read the full article here: Small accountancy firms fail basic AML checks on high risk clients.
Stricter Enforcement Could Be on the Way with the Move to FCA
It is vital that accountancy firms and all regulated businesses take these concerns seriously. As highlighted in our recent article, ‘What the AML Supervision Reforms Mean for Regulated Businesses’, AML supervision reforms are on the horizon, bringing with it a likely stricter regulatory landscape when AML supervision transfers to the Financial Conduct Authority (FCA).
Regulated businesses and professional services should take this time to prepare for potential changes, which may include:
- A more rigorous approach to AML audits and inspections
- A stricter expectation around risk assessments and customer due diligence (CDD)
- Increased penalties for non-compliance
Professional service firms and regulated businesses that act now, by strengthening their AML systems, will be best positioned to lessen the impact of supervision changes and any new regulatory expectations under the watchful eye of the FCA.
How RACO Can Help
At the Regulation and Compliance Office (RACO), we work with numerous professional service businesses across various sectors. We offer specialist support to help firms meet their obligations without overburdening internal teams. Our services include:
Compliance Services: Tailored solutions for AML, onboarding and regulatory support, ensuring your business remains audit ready. Find out more about our compliance services.
Due Diligence and Risk Assessment: Our expert compliance teams complete the entire due diligence process on your behalf, including client risk profiling, source of funds verification, and documentation. Learn more about our due diligence support.
Contact Us
If you would like to discuss our services in more detail, contact us at 0203 985 8550 or email us at info@regulationandcomplianceoffice.co.uk
