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AML: new CCAB guidance online

30 September 2020: Expanded CCAB guidance on anti-money laundering is now available in draft form, pending approval by HM Treasury.

The Consultative Committee of Accountancy Bodies (CCAB) has updated its anti-money laundering guidance in line with the fifth EU Money Laundering Directive. 

The CCAB working group, of which ICAEW was the lead, has been working for several months to update the guidance. The body has now issued over 100 pages of guidance which reflect the new regulations. 

“We've reviewed every chapter in detail,” explains Sophie Wales, ICAEW’s Head of Ethics and Economic Crime, and one of the authors of the new guidance. “We’ve updated it for the changes in the regulations. We've also done a thorough review to update and enhance all parts of the guidance and have added extra material on areas we thought would be useful for accountants.”

The new regulations include the requirement for accountants to report discrepancies in the People with Significant Control register at Companies House. The guidance now reflects that, along with pragmatic interpretations of the rules to help accountants apply them. The guidance has been submitted to HM Treasury for approval, but a draft is available to view now (click here to view).

Companies House

The new regulations include a requirement for members to report discrepancies in the People with Significant Control (PSC) register at Companies House. CCAB guidance explains that this reporting obligation arises only when taking on a new client, rather than as an ongoing monitoring requirement for existing clients. The guidance also includes an interpretation that reports should usually be made within 30 days of identifying the discrepancy – this timing is subject to approval by HM Treasury.

The CCAB has also proposed that where an accountant notifies their client of an identified discrepancy and that discrepancy is corrected within 30 days to the accountant’s satisfaction, then no report is required to Companies House. Again, we await approval from HM Treasury for this pragmatic interpretation of the regulations.

Electronic due diligence

The new regulations clarify that accountants are permitted to use electronic identity verification systems and they may be considered reliable if they meet certain conditions. However, you don’t have to use them. 

“There have been some potentially misleading messages in the market that it's compulsory to use electronic systems for Client Due Diligence (CDD) under the new regulations, and it's not,” Wales explains. “This guidance clarifies you can use these electronic identity verification systems subject to the system being reliable and giving appropriate assurance of identity. However, it's not mandatory.”

Vetting clients

Enhanced due diligence is now required in any case where a transaction is complex or unusually large. This broadens the position from the previous regulations, where the transaction had to meet both of these criteria.

Additional risk factors have been added including golden visa applicants, dealing with a client non-face-to-face without reliable electronic CDD, and transaction risks including oil, arms, precious metals, tobacco, ivory and protected species. These will affect your risk assessment as part of client due diligence.

The CCAB has also interpreted who should be considered an agent regarding the requirement for firms to train ‘agents’ on client due diligence and how to identify and report suspicions of money laundering and terrorist financing.

Other improvements

The new guidance has also been considerably expanded, with 12 case studies covering the beneficial owners that need to be considered for CDD in different kinds of client structure. 

It includes updated guidance on the identity verification required for a range of client types for CDD purposes (Appendix B). The list of red flags of money laundering or terrorist financing when identifying and risk assessing a client have been expanded. 

The guidance also expands the ‘reasonable excuse’ defence for failing to make a Suspicious Activity Report. It now includes situations (subject to Treasury approval) where all relevant facts are in the public domain, or law enforcement are aware of all the relevant details. This brings guidance in line with the legal sector. It also explains how to deal with a situation in which a Defence Against Money Laundering request is neither granted nor refused by the National Crime Agency. 

The revised CCAB guidance can be found here.