Professional scepticism and the need for a critical and questioning mind is fundamental to the role of accountants. And yet often, the tell-tale signs of criminal activity lurking in the accounts continue to be overlooked, often because accountants aren’t aware of them, warns Joanna Bliault, a forensic accountant and expert witness for the Metropolitan Police.
ACA-qualified Bliault spent six years in an audit role with Top 20 accountancy firm Wilkins Kennedy before joining the Metropolitan Police in 2014 as a forensic accountant using her understanding of accounting processes and documentation to delve into the murky depths of accounts and financial records to produce witness statements and evidence for trials. “My job is not to detect crime or to prove an offence,” Bliault explains. “It’s to look at the information I'm given and explain it to the people I'm working with, to lawyers, or ultimately to a jury.”
The list of crimes she has come across is extensive – it’s not just money laundering and fraud, but they also include burglary, theft, human trafficking and modern slavery, drug trafficking, terrorist financing and managing brothels. “There are exceptions such as violent crime and sexual offences but broadly speaking, most crime is acquisitive and is committed to generate money. And because most crime is acquisitive, there’s often a financial investigation aspect.”
Bliault’s experience, built up over the course of around 40 criminal and civil cases has given her a thorough understanding of some of the most common “red flags” in the accounts and financial records that land on her desk. She is urging accountants to take their professional scepticism to the next level in the course of their accounts preparation and tax work to ensure opportunities to file Suspicious Activity Reports (SARs) aren’t missed.
“I'm not suggesting there is a reluctance to report. This is information they might not have had before. I have seen things in accounting records that have either not been questioned or things that have been spotted but not pursued – for example when there's more money going into the bank account than they can account for. I’m asking them to go the extra step.”
SARs provide intelligence as well as opportunities to stop crime and uncover potential criminality. Information from SARs can lead to new investigations, enhance on-going operations and help identify patterns in crime. “Putting in a report doesn't automatically mean someone will be arrested” Bliault explains. “You’re contributing intelligence that may help law enforcement to prevent, detect, and disrupt crime.”
Accountants have a legal obligation to report suspicious activity, but Bliault accepts that this isn’t about accountants becoming law enforcement experts or criminal investigators. “Firms give their staff the best anti money laundering training they can but accountants aren’t police officers so they won't have the same perspective or knowledge at their fingertips.”
At the same time, she is mindful that accountants may feel that reconciling the legal obligation to report anything that seems untoward with the need to provide good client service is sometimes tricky. “As accountants, we are trying to look after our clients, to protect their confidentiality and to help them with their businesses. I'm not suggesting you stop doing that. Nor am I asking accountants to investigate or prove offences,” she says. “I'm saying, let's start to question things. And when you think something's a bit odd, tell us.”
Exerting professional scepticism is as important with longstanding clients as for those you don’t know, she warns. “There is an expectation gap created by the difference between the reality of crime and the crime we are presented with in television, film and the media.” It also makes it easy to unconsciously play down red flags when they appear, she warns.
“There is no way to tell the difference by looking at someone. They might be the hardworking guy with a corner shop in a T shirt and jeans, or the smartly-dressed, charming professional. Even people you've known for 20 years that you might have played golf or tennis with or whose kids might be in the same school as yours. When something looks a bit odd, put in a report.”
Bliault urges accountants to think beyond the numbers and remember that crimes are rarely without victims, who may have suffered violence or gone through awful experiences. “Something that might seem like a difference in the accounts or a matter of getting some extra records could be something with lots of victims behind it.”
She hopes that the strong and inherent focus on professional scepticism will stand accountants in good stead. “This is already a requirement. I'm hoping the information I’ve shared will make it easier”.
Suspicious Activity Reports (SARs): Does your firm know what to do?
Access our latest guidance on AML procedures and processes for firms.
To report a crime or a fraud you should contact your local police service on 101 or Action Fraud on 0300 123 2040.
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