How 5AMLD will affect accountancy firms
14 January 2020: discover four ways the new Anti-Money Laundering Directive will affect accountancy firms with ICAEW’s integrity and law manager, Sophie Wales.
On 10 January 2020, the Fifth Anti-Money Laundering Directive (5AMLD) came into force in the UK. Building on the regulations drawn up by 2017’s 4AMLD, the directive aims to crack down even further on financial crime by increasing transparency. Here we explain the four knock-on effects the 5AMLD will have on accountancy firms.
1. You’ll have to check the PSC register for new clients
Anyone taking on a company or LLP as a new client will have to obtain evidence that the client has filed details of their Persons with Significant Control (PSCs) with Companies House, and the firm will also need to report discrepancies between the information they hold, and what’s on the PSC register. For details on how to report discrepancies see the government's guidance.
2. You can verify a client’s identity electronically
The 5AMLD clarifies that electronic due diligence can be used as a source of verifying client identity. Accountants must ensure that the process is secure from fraud and misuse and capable of providing an appropriate level of assurance that the person claiming a particular identity is in fact the person with that identity.
3. Enhanced Due Diligence will be needed more often
Enhanced due diligence is now required for additional risk factors. These include golden visa applicants, and dealing with a client remotely without reliable electronic CDD transaction risks (including oil, arms, precious metals, tobacco, ivory and protected species).
4. 5AMLD will include indirect providers of tax advice
The extended scope of the directive will cover new sectors, including letting agents, art dealers and cryptocurrency exchanges and wallet providers. More relevant for accountants is the fact that the directive has been amended to include all providers of tax advice – whether direct or indirect – so even high-volume repayment agents will fall within scope.
What are the benefits of 5AMLD?
The ability to use electronic identity verification should help with Know Your Client take-on procedures. Much of the data on the PSC register is unreliable, so proposals to improve the accuracy of this are a step in the right direction.