Jeffrey Davidson writes for International Accountant on expert evidence
Serious and organised crime, from drugs and cybercrime to people trafficking, costs the UK economy an estimated £24 billion a year.
The majority of its financial proceeds are laundered through UK banks and other regulated businesses, as are trillions of pounds each year from international criminal activity or corruption
Money laundering transfers financial power from legitimate businesses and individuals into the hands of criminals, while undermining financial institutions and markets. The accountancy industry is unfortunately – and mostly unwittingly – involved in the practice, as criminals seek to clean their money by concealing it as part of the legitimate financial system. For the victims of crimes enabled by laundered money, the effects can be devastating and lifelong, from ruined business reputations to the loss of family members and childhoods from drugs, firearms and violence.
For most accountants it is a case of stopping this unknowing assistance, says Jeffrey Davidson: “It’s virtually impossible to launder money without banks, lawyers and accountants involved. Because we manage people’s money through client accounts or through doing their books, people are able to use accountants unwittingly.”
To help prevent accountants from becoming professional enablers of money laundering, firms must also look at their culture, says Jeffrey. Rotating clients between accountants, especially partners, on a regular basis can stop staff getting too close to clients and agreeing to do something they shouldn’t in order to maintain that relationship, for example.
Updated money laundering regulations introduced in 2017 require staff to be screened before and during an appointment and should make firms assess whether staff are confident in the work they are doing and whether there is sufficiently regular training and appraisals to check this. For smaller firms or sole traders this, can be problematic in terms of cost and capacity, but Jeffrey says that a requirement for firms to incur the cost of an external scrutineer to review them and their procedures in this area every year would be beneficial.
“We are accountants but we are business people looking to sell professional services and earn a living. We won’t spend our whole time wondering about regulatory issues. You need somebody you’re accountable to,” he says.