Preparing for an Anti-Money Laundering Visit

As an accountant working in practice, you play a crucial role in safeguarding the financial system against money laundering and terrorist financing activities.

Compliance with anti-money laundering (AML) regulations is essential not only for maintaining the integrity of our profession but also for protecting your clients and your practice.

In this blog, we draw on our own experience of compliance visits and the key steps you can take to adequately prepare for an AML visit from your regulator. By following these guidelines, you can demonstrate your commitment to combatting financial crime and ensure a smooth and successful visit.

At Mercia we hugely value our relationships with regulators and are able to draw on this experience to formulate the advice, checklists, work programmes and guidance we create for our clients.

Specifically, we recently enjoyed a QAD AML compliance visit and were very happy with how it went.

These are the things that we do at Mercia to ensure that we are compliant with the AML regulations and ready for a visit at any time.

• ensure we understand the AML rules
• document AML risk assessment, processes and procedures
• mandatory AML training for all team members – verified and recorded
• periodic spot checks on all training records, client due diligence (CDD) and engagement letters
• CDD checks on all our regulated engagements
• engagement letters in place for all our regulated engagements
• completion of and adherence to the Mercia AML compliance checklist
• evidence submission of Money Laundering Reporting Officer (MLRO) Suspicious Activity Reports (SAR) to the National Crime Agency (NCA).

Considering these areas in detail…

Understand the AML rules

Before the compliance visit, it is essential to have a comprehensive understanding of the AML regulatory framework.

Familiarise yourself with the Money Laundering Regulations and keep yourself up to date on changes to AML laws and regulations. Ensure that your practice adheres to the latest requirements.

Money Laundering Update and Topical Issues

Perform and document an AML risk assessment

Conduct an internal AML risk assessment to identify potential risks and vulnerabilities within your accountancy practice.

Evaluate your client base, services provided, and geographic locations to determine the level of inherent risk associated with your practice.

This assessment will enable you to implement appropriate risk-based controls and procedures to mitigate identified risks.

Money Laundering Compliance Manual

Develop, document and implement AML policies and procedures

Establish comprehensive AML policies and procedures tailored to your accountancy practice.

These should include CDD procedures, risk-based assessments, recordkeeping guidance, and processes for any reporting suspicious activities.

Train your team

AML compliance is a shared responsibility within your accountancy practice. Provide regular training sessions to educate your team about AML regulations, red flags of money laundering, and the importance of compliance.

Ensure that your team know what to do to detect and report any suspicious activities effectively. They must also know who they can talk matters through with, if they do come across something potentially suspicious.

All team members should know who your MLRO and their deputy are and how to contact them.

Accountancy Training Programme

Periodic spot checking

Regularly audit and monitor your AML processes to assess their effectiveness. Perform periodic reviews of client files and transactions to ensure compliance with AML regulations.

Consider engaging an independent reviewer to provide an objective evaluation of your AML controls and identify any areas for improvement.

Anti Money Laundering Compliance Review

Client Due Diligence (CDD)

CDD is a critical component of your AML obligations. Review your CDD processes and ensure that they are robust and consistent. Verify the identity of your clients, assess their risk profiles, and document all relevant information in a systematic manner.

Regularly update and re-evaluate your CDD information to reflect any changes in client circumstances.

Conduct internal AML compliance reviews

Regularly review your AML compliance to assess your adherence to regulatory obligations. Conduct internal reviews to identify any deficiencies or gaps in your AML controls.

These reviews will help you identify areas for improvement and address any shortcomings before the compliance visit.

If you are struggling for time, an external review could be performed.

Money Laundering Compliance Manual Anti Money Laundering Compliance Review

Reports to your MLRO/NCA

Any AML SAR reports to the NCA should be documented by your MLRO including any decisions made to not report.

Prepare for the actual visit

Prior to the compliance visit, gather and organise all relevant AML documentation, risk assessments, and training records. Ensure that these documents are readily available for review by the regulators along with NCA submission receipts.

Designate a point of contact within your practice to coordinate with the regulators during the visit and ensure that all the files are logically filed and readily accessed. As with any regulatory visit, do not leave everything to the last minute!