Getting to grips with AML: asset transfers
26 January 2021: Instalment four of ‘Anti-money Laundering: The Basics’ focuses on asset transfers – how an accountant can avoid becoming complicit in hiding the proceeds of crime through the movement of assets.
Using the proceeds of crime to buy or transfer assets, thereby distancing the money from the illegal activity, are a classic means by which criminals cover their tracks.
The fourth instalment of IFAC’s and ICAEW’s AML series warns that professional accountants can inadvertently help criminals move the proceeds of crime by structuring an asset transfer or providing tax advice on transactions.
Accountants are urged to apply a risk-based approach to not – unwittingly – become involved in illegal activity. “Asset transfers performed in this way are all about obscuring the source of funds,” says Sophie Wales, Head of Ethics and Economic Crime. “Often these transactions are performed in quick succession to hide where the money came from.”
The guidance sets out the questions an accountant should consider when advising a client on the transfer of an asset to make sure they are alive to the risks of ulterior motives. If the response to any of the questions in the guidance rings alarm bells, enhanced due diligence is needed.
Wales says: “Asking the questions and reflecting on the answers is the first step in assessing how much due diligence is needed. The guidance also provides a case study to illustrate how an accountant could get caught up in an asset transfer that is linked to illegal activity.”
The guidance suggests situations in which an accountant should walk away, for example where there are question marks over the honesty of a client, where source of funds enquiries suggest the origin of the money cannot be explained, or if the seller, purchaser, or the country in which the asset is located is subject to financial sanctions.
Read ‘Anti-money laundering: the basics Instalment 4: Asset Transfers’ from IFAC and ICAEW in full here.