AML software for accountants, tax advisers and TCSPs

• Structures, not just people: a client is often a company or trust, and the person who controls it may sit behind nominees or holding companies in other jurisdictions.
• Company formation: forming companies, providing registered offices or acting as nominee director puts a service provider at the point where a structure is created.
• Remote engagement: many clients are onboarded without a meeting, so identity and authority to instruct have to be established at a distance.
• Politically exposed clients: a PEP, or a family member or close associate of one, is not a client to refuse but a client who calls for enhanced due diligence.
• Long relationships: an engagement can run for years, and a client who was clean at onboarding can be designated or linked to adverse news later.
• Small teams: many practices have no dedicated compliance function, so checks have to be quick to run and easy to evidence.

1. 1

   Assess the practice's risk

   A written risk assessment of the services offered, the client base and the jurisdictions involved, which sets how much scrutiny each engagement receives.

2. 2

   Identify the client and its owners

   Customer due diligence on the client, and for companies and trusts, identification of the beneficial owners and the people with control.

3. 3

   Screen before engagement

   Sanctions, PEP and adverse media screening of the client, its directors and its beneficial owners before the engagement letter is signed.

4. 4

   Apply enhanced due diligence

   Further checks, such as source of wealth and senior approval, where the client is a PEP or the risk is otherwise higher.

5. 5

   Keep monitoring and records

   Re-screening during the engagement, keeping the evidence of every check, and reporting suspicious activity to the financial intelligence unit through the firm's nominated officer.

Under FATF Recommendation 22, accountants and trust and company service providers are designated non-financial businesses and professions, and must apply customer due diligence, PEP measures and record keeping when they carry out the relevant activities for a client. Recommendation 23 extends suspicious transaction reporting to them, and Recommendation 28 requires them to be supervised.

In the UK, accountancy service providers, tax advisers and trust or company service providers are within the Money Laundering Regulations 2017. Most are supervised by their professional body; those without one are supervised by HMRC. In the EU, auditors, external accountants, tax advisers and trust or company service providers are obliged entities under the EU anti-money laundering framework. Supervisors generally expect to see a practice-wide risk assessment, client files that show what was checked and when, and evidence that higher-risk clients were treated differently.

• Company and ownership checks: a company lookup that reaches the directors and beneficial owners and screens them too.
• PEP coverage beyond the client: family members and close associates, as far as the data allows.
• Adverse media with categories: so an allegation can be told apart from a conviction during review.
• Explainable matches: each alert shows which list, which record and which name matched, so namesakes can be cleared quickly.
• Re-screening of the client base: existing clients checked again when lists change, with alerts only on changes.
• A file you can show: a record of who screened whom, when and with what result, kept per client.