By - 26 July 2022.
In this article, we’ll be exploring the reasons behind anti-money laundering (AML), how it can benefit accountants, and what risks a business runs if they don’t carry out AML procedures properly.
We’ll also talk about how AML software can make the process easier for accounting firms and highlight the key differences between traditional paper-based AML processes and using new and useful software tools to help you along.
What is anti-money laundering (AML) and why does it exist?
The purpose of anti-money laundering (AML) exists to prevent the likes of terrorist organisations, criminal enterprises and malicious individuals from using financial systems and professional services to launder the proceeds of illegal activities. In simple terms, this means making “dirty” money look “clean” so that it can be moved around without arousing suspicion.
AML measures typically involve financial service organisations taking steps to identify their customers, understand their transactions, and report any suspicious activity to authorities. In recent years, the fight against money laundering has intensified as terrorist groups have increasingly relied on financial networks to move and hide their funds. As a result, AML compliance has become an important part of doing business in the global economy.
By understanding how money laundering works and taking steps to prevent it, businesses can help protect themselves and the financial system as a whole.
How can accountants benefit from good AML processes?
From an accountant’s perspective, aside from regulatory requirements, good AML practices help to protect both their reputation and their business. In today’s environment, being associated with money laundering, whether intentional or accidental, could damage a firm’s reputation beyond repair.
Good AML compliance also safeguards a firm’s business by ensuring that they are not unwittingly doing business with criminal organisations or individuals. This could lead to large financial losses, or even criminal charges if the firm is found to be complicit in money laundering activities.
What risks do accountants face if they don’t carry out AML procedures properly?
The risks to a business of not carrying out AML properly are significant. Firstly, there is the reputational risk as we have already mentioned. Secondly, there is the regulatory risk; firms who do not comply with AML regulations can be fined or even blacklisted, which would effectively put them out of business.
Finally, there is the financial risk; businesses that don’t carry out proper due diligence on their clients run the risk of being used to launder money, which could lead to huge penalties.
All of this makes AML best practices not only helpful for accountants but essential in building a business that’s well respected in its field.
How can AML software help accountants save time and money?
AML software is designed to help financial service and accountancy firms to comply with anti-money laundering regulations. Whilst the measures vary from industry to industry and country to country, they generally require businesses to take measures to stop their services from being used for illegal activity.
Good AML software can help accounting firms to save time and money by automating many of the tasks associated with anti-money laundering regulations. For example, rather than manually checking each client against sanctions lists, firms can use software that will automatically flag any potential matches. This frees up staff to focus on more value-added tasks such as providing advice and consulting services to clients.
This means there are big benefits to fee earner potential and overall efficiency. An accountant charging £100 per hour can be focusing on billable work rather than worrying too much about manually going through the complaint process.
In addition, using software also reduces the risk of human error, which could save accountancy firms from incurring significant fines if important data is missed or misinterpreted.
What are the key differences between traditional paper-based AML and using software?
There are several key differences between traditional paper-based AML and using software, as follows:
- Using software can automate many of the tasks associated with compliance, which saves time and reduces the risk of human error.
- Good AML software will enable firms to store all of their client data in one place, which makes it much easier to search and review when needed.
- The software approach also makes it easier to spot trends and patterns that might otherwise be missed when reviewing paper records.
- There’s also a push from the UK Government to move towards using digital means to confirm people’s identities, which is somewhat of a u-turn from years gone by!
How Identitech can help accounting firms with Anti Money Laundering
If you’re looking for market-leading compliance software to assist your firm with Anti Money Laundering, then Identitech is here to help. Our easy-to-use, web-based platform will streamline your compliance while saving you time and money.
Book a free demo and take a look for yourself at just how quick and easy AML compliance can be.