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Getting to grips with AML: what exactly is money laundering?

24 September: ICAEW has teamed up with the International Federation of Accountants to produce a series of six short guides for accountants to enhance their understanding of money laundering.

AML: The Basics covers how money laundering works, the signs to look out for and how to mitigate the risks.

“It is increasingly important to spot the signs of money laundering to avoid becoming complicit,” says Sophie Wales, ICAEW’s Head of Ethics and Economic Crime.

That is why the International Federation of Accountants (IFAC) and ICAEW have released the first instalment in their Anti-Money Laundering: The Basics educational series. It will be a resource primarily for small and medium practices, and accountants less familiar with anti-money laundering (AML), while also guiding those looking for a quick refresher or reference. 

The series uses the risk-based approach of the Financial Action Task Force – the global money laundering and terrorist financing watchdog – as a starting point.

“The challenge for accountants is to understand money laundering and how it works,” says Wales. “The first instalment covers issues such as placement, layering and integration. It also explains why accountants should care about economic crime. Anti-money laundering is not just a compliance activity.”

The guidance points out that drugs gangs, human traffickers and other criminals are enabled by money laundering and that, according to the United Nations Office on Drugs and Crime, the potential annual value of money laundering may exceed $1tr globally. There is a lot at stake.

“Money laundering includes the proceeds of any crime – fraud, or tax evasion, for example – as well as more sinister organised crimes,” says Wales. She points out that this is an ongoing issue that has only been exacerbated by COVID.

“Accountants need to understand how they could get caught up in enabling money laundering activity,” she says. “This is more than compliance.”

Read instalment 1 of the guide, Introduction to Anti-Money Laundering for Professional Accountants by clicking here.