What is required of an ICAEW anti-money laundering (AML) supervised firm?
ICAEW AML supervised firms play a critical role in detecting and preventing money laundering and terrorist financing.
Your firm must comply with:
- The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the 2017 Regulations as amended by The Money Laundering and Terrorist Financing (Amendment) Regulations 2019)); and
- the Proceeds of Crime Act 2002 (POCA) as amended by the Serious Organised Crime and Police Act 2005 (SOCPA).
To prevent money laundering, ICAEW supervised firms must:
- carry out a firm-wide risk assessment to understand the money laundering and terrorist financing risks your firm faces;
- establish, maintain and regularly review policies, controls and procedures to mitigate and manage effectively the risks identified through a firm-wide risk assessment;
- carry out proper customer due diligence on your clients, which includes a risk assessment of the money laundering risks of the client and verify the client’s identity and source of funds (where appropriate). The amount and type of verification procedures should reflect the risk rating of each client;
- train all staff so that they can properly identify AML risks, red flag indicators and suspicious activities; and
- appoint a nominated officer to receive internal suspicious activity reports and make external suspicious activity reports (SARs) to the National Crime Agency.
If you believe a firm supervised by ICAEW is breaching the Money Laundering Regulations 2017, you can raise your concern confidentially.
Approving beneficial owners, officers and managers – reviewing DBS certificates
ICAEW must check that supervised firms comply with Regulation 26 and that all beneficial owners, officers and managers (BOOMs) do not have a relevant criminal conviction.
ICAEW can only approve a BOOM if we have reviewed a DBS certificate.
As part of our onsite monitoring reviews, we ask firms to show us the original criminal record check certificate for each BOOM. We will remind your firm of our need to check compliance when we notify your firm about your monitoring review dates.
Every newly appointed BOOM must obtain a DBS certificate at the time they become a BOOM. We capture new appointments when a regulatory application is submitted or when we are notified of a change to your firm’s structure via a notification to records. On receipt of the regulatory application or notification to records, we will write to you to request that you send in the new BOOM’s original criminal record check certificate. We will need this before we are able to authorise the new BOOM.
ICAEW supervised firms that provide TCSP services
Under Regulation 54 of MLR17, HMRC must maintain a register of all relevant persons who are trust or company service providers (TCSPs) that are not already registered with FCA.
Firms that are not on the register are not permitted, under the MLR17, to provide TCSP work. If you perform TCSP work when not on the register, you may be subject to disciplinary action.
If you have told us on your annual return that you have performed TCSP work in the last 12 months (ie, answered ‘yes’ to any of questions AML07a to AML07e), we will include your firm on HMRC’s TCSP register
We operate a proactive cyclical monitoring approach to ensure we regularly review all of our firms, on a risk-based cycle. The frequency with which we review our firms is determined by the risk profiles we prepare on our firms using annual return data, complaints information or intelligence from law enforcement. Visit cycles vary from annual to eight years, depending on risk. Our AML monitoring reviews are usually conducted as part of our Practice Assurance monitoring reviews.
The type of review (onsite or desk-based) is determined by the AML risk within your firm as well as the size of your firm. This is because the firm size directly correlates to impact (i.e. through size of clients; activities of clients; geographical spread of client base; and the range and nature of services provided by the firm).
We have an experienced team of reviewers, all of who are chartered accountants. As well as keeping up to date with the latest guidance and best practice, we provide our reviewers, with up-to-date information on the domestic and international risks of money laundering and terrorist financing which affect the accountancy sector. We provide regular training to continue to embed our supervisory strategy and to ensure they are equipped to take appropriate decisions on the suitability of anti-money laundering policies and procedures.
Our desk-based reviews fall into three categories:
- Desktop - we ask the firm to complete a questionnaire about their procedures including AML procedures and to submit examples of CDD for new clients and on-going CDD for existing clients. We review these examples and if the reviewer has any questions or requires more information she / he will telephone the firm and discuss the issue. We may request further evidence in some cases.
- Telephone - we ask the firm to complete a questionnaire about its AML procedures. We review this information prior to the telephone call. During the call the reviewer will discuss the information provided and the procedures followed by the firm. We may request further evidence in some cases. For further information, please read the ICAEW Your AML Telephone Review.
- New firm webinar - we ask new firms to view a 45-minute webinar that introduces them to the regulations we require firms to follow. A reviewer will then telephone the firm to discuss the firm’s activities and set-up and any questions and issues arising. Our aim is to help new firms to set up appropriate procedures to enable them to comply with all the relevant regulations from the beginning of the practice.
We discuss the same matters on our desk-based reviews as we do on our onsite reviews.
ICAEW reviewers gather information about the firm’s procedures during the opening meeting discussions, from a brief review of the firm’s AML procedures manual, compliance reviews and from client file reviews. They check that
- the firm has obtained criminal record check certificates for all its BOOMs and that these are ‘clean’;
- the firm has performed a firm-wide risk assessment and that this risk assessment reflects the information declared in the annual return on high-risk clients and services;
- the firm is conducting client due diligence on a risk-sensitive basis;
- the firm has recognised clients and situations where enhanced due diligence is required;
- the firm is monitoring its compliance with anti-money laundering policies and procedures;
- the firm identifies ‘trigger events’ to update CDD on existing clients;
- there is sufficient information on file to demonstrate that the identity of the client has been verified and suitable evidence retained;
- a money laundering reporting officer (MLRO) is in post and aware of his / her responsibilities;
- internal procedures are in place for making suspicious activity reports to the money laundering reporting office (MLRO);
- if the firm has submitted a suspicious activity report to the National Crime Agency, we check that the information disclosed is accurate and complete; and
- all relevant employees have received appropriate training relating to money laundering.
We ensure the firm has understood and implemented the key aspects of the regulations and, via our review of the firm’s documentation and its client work, that the firm consistently applies its procedures across all business streams and that they are effective.
We select a risk-based sample of client files and CDD documentation. The number of files will vary according to the size of the firm and the AML risks within the firm’s client base and the services it provides.
We set out our findings in the closing meeting record. The firm is required to respond to each of the findings we raise, setting out what action they will take to address them. We assess whether the firm has the commitment and ability to address the issues.
2021/2022 AML supervision report
Read our 2021/22 Anti-money Laundering supervision report for the results of our monitoring visits, the outcomes of those visits and enforcement action taken. This report also summarises all of our anti-money laundering supervisory activity during the period. Firms should pay particular attention to the most common issues we see section which includes links to resources to support compliance.
ICAEW AML service
As the AML supervisor to nearly 11,000 firms, ICAEW has a unique, practical and technical insight into AML compliance needs. ICAEW has teamed up with SWAT UK to create a package of online systems and insightful online training seminars tailored to meet your requirements.