AML Compliance and accountancy sub-contractors

A question we are often asked is, ‘Do sub-contract accountants & bookkeepers have to register themselves separately for AML purposes as accountancy service providers?’ In many cases the answer is, ‘No, they do not’. But let’s look at this in a bit more detail.

The situation

Imagine an accountant or bookkeeper in practice (someone who offers accountancy or bookkeeping services to the public for a fee) – let’s call them M – uses a sub-contract accountant to do some of the work (which might be a self-employed individual or a limited company) – let’s call them S. Obviously M is subject to the Money Laundering Regulations 2017, needs to appoint a MLRO, be registered for AML compliance with a supervisory body (either one of the professional bodies or HMRC), have a Firm-wide Risk Assessment and an AML Policies & Procedures document, needs to ensure relevant employees have AML training, and that there is a system for reporting any suspicions of money laundering or terrorist financing.

But does S also need to do that?

ICAEW guidance

The Institute of Chartered Accountants in England & Wales (ICAEW) produce some guidance for their members on subcontracting accountancy services. This includes the following guidance concerning AML supervision:-

If you provide all of your services to accountancy firms that are supervised accountancy service providers then you will not require separate supervision, as long as you meet all of the following criteria:
(i) all of the services you provide are to the firm (rather than providing services directly to the firm’s clients as your clients),
(ii) you are included in the firm’s anti money laundering procedures, reporting and training programmes and
(iii) you have a contract with the firm confirming that every aspect of the relationship between you meets all anti money laundering requirements.
This would mean that you only act as a subcontractor to supervised accountancy service providers and do not have any other clients.

HMRC guidance

HMRC also produce guidance Money Laundering Supervision for Accountancy Service Providers. This includes the following guidance concerning AML supervision:-

If all your customers are accountancy service providers supervised by HMRC or a professional body, or banks supervised by the Financial Conduct Authority you do not need to register so long as:

  • you do not do business directly with the supervised accountancy service providers’ or the banks own customers
  • you’re included in the supervised accountancy service providers’ or banks anti-money laundering controls and procedures, suspicious activity reporting, and training programmes
  • you have a written contract with each of your customers confirming that every aspect of the relationship between you meets all anti-money laundering requirements

You need to meet all these conditions, otherwise you’ll need to register.

Conclusion

Hopefully the guidance reproduced here will leave you with a clear understanding of whether or not you need to register for AML supervision, and the arrangements required between the main contractor and the sub-contractor insofar as AML compliance is concerned.

If you think that you may not have sufficient documentation to satisfy your AML supervisor to a satisfactory standard, or would simply like to discuss your firm’s AML compliance, then please contact us now.

David Winch MLRO support services ltd

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