The Institute of Chartered Accountants in England and Wales (ICAEW) says that the data leaked by the Pandora Papers investigation show how important it is for accountants to ensure that they know their clients for Anti-Money Laundering (AML) purposes.
The Pandora Papers are some 11.9 million documents that were leaked to the International Consortium of Investigative Journalists. The papers reveal details of the purchase of properties and other assets by High Net Worth (HNW) individuals who include politicians, billionaires, celebrities, royal family members, leaders of religious groups and criminals around the world.
The papers reveal details as to how individuals use a web of offshore entities to enable them to hide the beneficial ownership of assets and wealth.
Accountants may potentially find themselves as enablers of money laundering offences if they are involved in an arrangement that allows another to acquire, retain, use or control criminal property.
The UK has no de-minimis limits in terms of Anti-Money Laundering Reporting of criminal property to the National Crime Agency (NCA).
The ICAEW provides the following key takeaways for managing HNW clients:
- Make sure you understand where your client’s money comes from.
- Align your risks based on their background, network and associations.
- Manage political risks, exposure and corruption against available indexes.
- Manage your obligations for verifying discrepancies in client beneficial ownership against recorded information at Companies House.
The Consultative Committee of Accountancy Bodies (CCAB) current AML guidance for the accountancy sector includes changes introduced from January 2020 by the EU's Fifth Anti-Money Laundering Directive (AML5). The guidance has yet to be ratified by the Treasury, presumably the delay is due to the fact that the UK is exploring making its own rules since Brexit.
Useful guides on this topic
AML: Anti-Money Laundering Zone
AML Zone takes you to our supporting AML guides, checklists and articles.
- Client identification
- Risk Assessment
- Client verification
- and in-house training.