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Economic crime: gatekeeper or enabler?

Author: ICAEW

Published: 25 Mar 2022

With fraud on the rise, we look at how ICAEW is working with other stakeholders to ensure its member firms stay at the forefront of the fight against economic crime, and avoid unwittingly becoming professional enablers.

Alongside fellow professionals – such as lawyers, insurance brokers and estate agents – accountants are well placed to spot, report and disrupt illicit financial activities. But this position also puts them at risk.

The Economic Crime Strategic Board, which comprises government agencies, financial regulators, banks and professional bodies, has identified the role of so-called “professional enablers” as a key issue in the fight against money laundering and related economic crimes.

The Board’s Economic Crime Plan for 2019 to 2022 states: “Professional enablers can be complicit, negligent or unwitting, but are key facilitators in the money laundering process and often crucial in integrating illicit funds into the UK and global banking systems.”

“It’s been a concern for some time that there are professionals who are either knowingly or inadvertently playing a part in helping criminals to launder their proceeds of crime through what appear to be legitimate businesses,” says Duncan Wiggetts, Chief Officer, Professional Standards Department, ICAEW, who represents the accountancy profession at the Board’s meetings.

Reach and influence

As the AML supervisor for almost 11,000 firms, ICAEW has the technical, practical and legislative authority to address concerns about professional enablers in the accountancy sector. It can use its reach and influence to support its firms in complying with their AML responsibilities, as well as encouraging them to engage with their broader ethical and social obligations.
According to the Crime Survey for England and Wales there were 5.1 million fraud offences in the year ending September 2021, an increase of around a third (36%) on the year ending September 2019.

“It’s really important that ICAEW is active and visible in this area, not least because of the accountancy sector’s role in preventing money launderers doing business in the UK, but also because the Office for Professional Body AML Supervision (OPBAS), our oversight body for AML, expects a robust risk-based approach,” says Michelle Giddings, Head of AML, ICAEW.

“We’re sometimes asked whether our firms’ members are expected to be detectives as well as accountants. And of course, ultimately, they’re not detectives; they’re accountants,” she stresses. “They’re there to do their jobs.”

“But they do also have some quite fundamental legal responsibilities in this area,” she adds, “which means they have to be answering the right questions at the right time to make sure they’re identifying risks and mitigating them as necessary.”

All Too Familiar

Collaboration is crucial in combatting the upward trend in economic crime. So ICAEW has been cooperating across its departments, as well as working closely with other agencies and organisations, to produce materials and tools that help firms play a positive role in preventing and uncovering financial crimes.

One of the highlights this year is the launch of a new educational film drama, All Too Familiar, which focuses on how firms can put themselves and others at risk when they do not conduct proper AML checks and due diligence.

The film, written by Wiggetts, was created in association with HMRC and aims to challenge professional mindsets by provoking discussion about how long-held relationships can cloud judgement, leading firms to miss red flags and even overlook suspicious behaviours.

“What we wanted to do was include important economic crime issues in a way that would resonate with member firms,” says David Gomez, Senior Lead, Ethics in ICAEW’s Reputation and Influence Department. “And the film is also in line with our strategic theme of strengthening trust in ICAEW members and the wider profession, a key part of which is equipping members in the fight against economic crime.”

Bringing learning to life

To support the film’s messages, ICAEW has worked with HMRC to develop a range of learning materials for firms to use in training. Each of the topic areas highlight issues for discussion, points that people ought to think about, and offer signposts to further guidance from ICAEW and other bodies.

The learning materials also tackle issues beyond AML, focusing on ethical and professional responsibilities more broadly. “So, for example, ensuing your objectivity isn’t clouded by your close relationship with the client, and about using professional judgement to challenge things that don’t feel quite right,” says Gomez.

“To bring it to life a bit, we’ve also included some of the props from the film, or things that might have been featured in the storyline,” she adds. One example is what a police search warrant might look like. “We believe this will help it become a more realistic experience, and make firms think about what could happen in real life,” she explains.

Bite-sized guidance

In addition to All Too Familiar, ICAEW has been producing and promoting a range of other materials and tools to support AML risk assessment and compliance. One of these is the quarterly AML Risk Bulletin sent out to money laundering reporting officers and compliance principals at supervised firms. These share the latest updates on AML risks and red flag indicators.

“Our Risk Bulletins draw on the knowledge, intelligence and experience of law enforcement and banks, as well as other regulated sectors,” says Giddings. “So they are a really good resource for firms in shaping their training and procedures.”

“We have also recently published the results of our thematic review on trust and company service providers,” she adds. “These are perceived as high risk services and are performed by nearly 7,000 of our firms.” The report’s findings should help these firms better manage the risks by setting out where they are doing well, and where they could do better.

In another new approach to engaging firms, last October saw the launch of AMLbites – 10-minute videos providing practitioners with the basics on important AML topics. So far these have covered firm wide risk assessments, basic customer due diligence, enhanced due diligence for higher risk clients and suspicious activity reports (SARs).

“We’ve also run four webinars in the last 12 months,” says Giddings. The first was delivered in collaboration with the UK Financial Intelligence Unit, part of the National Crime Agency, and looked at submitting good quality SARs. The second followed on from this topic and focused on when to request a defence against money laundering and how to avoid tipping off. The third webinar covered how to complete effective customer due diligence and our most recent session looked at money laundering risk assessments.

Alongside these latest activities, ICAEW has also continued to deliver a longstanding AML service for member firms. This was originally developed more than a decade ago in collaboration with a commercial training organisation. It aims to support firms in complying with AML requirements, and help them keep their policies and procedures relevant and up-to-date.

“We offer firms something that is proportionate to their needs, sensibly priced and flexible enough to change when legislation changes,” explains Dean Neaves, Senior Manager, Quality Assurance, ICAEW. The service is provided in partnership with Mercia, which specialises in training and support services for the accountancy sector. It offers online access to a range of practical documentation, help sheets and training, which are tailored specifically to the size of firm and its client profile.

A positive role

“We want our firms to realise they can play a positive role as active gatekeepers to the UK financial system,” emphasises Gomez. In this role, they can use their professional judgement to spot the signs of illicit activities and they have the opportunity to report and disrupt crimes ranging from financial fraud to human trafficking and terrorism.

To achieve this, they have to understand the need for, and requirements of, AML legislation, and to appreciate the dangers of familiarity and the need for ongoing professional scepticism.

ICAEW is continuing to work with its firms and other stakeholders to drive these messages home. But firms themselves also need to recognise their obligations and use the resources available to ensure they can play their gatekeeper role effectively and reduce their risk of becoming an enabler.

“That badge of professional enabler is obviously one that we're keen to avoid,” emphasises Nikhil Manek, MLRO and overall lead for financial crime, KPMG. “And part of avoiding that is by asking the right questions, and challenging the information that you get presented with.”

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