AML Supervision Report 2024

ICAEW AML Supervision Report 2023-24

The ICAEW Anti-Money Laundering (AML) Supervision Report 2023/24 outlines the institution’s comprehensive efforts in combating money laundering within the accountancy sector. It reflects ICAEW’s role as the UK’s largest professional body supervisor under the Money Laundering Regulations (MLRs) of 2017. The report provides detailed insights into ICAEW’s risk-based approach to supervision, its commitment to ensuring compliance among members, and its strategic focus on mitigating risks related to money laundering, terrorist financing, and proliferation financing.

Key Highlights From The AML Supervision Report 2023/24:

1. Enhanced Risk-Based Supervision

ICAEW has embraced a more nuanced, risk-based approach to its AML supervisory activities. This method directs resources towards higher-risk firms, which constitute 35% of the 1,088 proactive monitoring reviews undertaken in the year. While compliance levels dipped slightly from 84.4% in the previous year to 80.7%, this reduction is attributed to the revised monitoring methodology. The new system emphasizes not just technical compliance, but the effectiveness of firms’ AML policies and procedures. The primary focus is on Customer Due Diligence (CDD) and ensuring that firms identify and mitigate money laundering risks more robustly.

2. Focus on Professional Enablers

The concept of “professional enabling” is a key theme in the report. ICAEW works to ensure that its supervised firms and members do not unwittingly become professional enablers of money laundering. The report incorporates the first universally accepted definition of a professional enabler from the UK Economic Crime Plan 2023–2026. ICAEW takes a proactive stance, investigating cases where firms or individuals might have facilitated illegal activities, taking disciplinary actions when required. In FY23/24, 39 firms faced sanctions, and one member was excluded for their role in money laundering facilitation.

3. Revised Disciplinary Framework

On June 1, 2023, ICAEW updated its disciplinary framework to make it more transparent and efficient. This change included the introduction of non-financial sanctions, such as mandatory training for members. The focus of these revisions is to enhance accountability while offering corrective measures to improve firms’ compliance. Interim orders during investigations have also been expanded to protect the public more effectively.

4. Proactive Monitoring and Enforcement

ICAEW undertakes both onsite and desk-based reviews to monitor compliance. In the past year, 645 onsite and 467 desk-based reviews were completed. Firms are classified as compliant, generally compliant, or non-compliant. The most frequent issue identified was ineffective ongoing CDD, with 36.7% of non-compliant firms failing to update client information regularly. ICAEW’s supervisory strategy is evolving to focus on not only identifying non-compliance but also providing training and guidance during proactive monitoring reviews.

5. Thematic Review for FY24/25

ICAEW has planned a thematic review focused on firm-wide risk assessments for the upcoming year. This review will guide firms on how to identify money laundering risks across different areas of their business and implement effective controls. The goal is to support firms in refining their risk assessments and improving their overall AML strategies.

6. Resources and Education

ICAEW continues to provide significant educational outreach to its supervised population. The “All Too Familiar” film, AML webinars, and the AMLbites video series are some of the tools used to raise awareness and educate firms on best practices. Over 26,000 people engaged with AMLbites videos, and nearly 6,600 unique monthly visits were recorded on ICAEW’s AML resources page.

7. Continued Challenges

Despite progress, some firms still struggle with key areas like verifying client identities and performing regular compliance reviews. ICAEW’s report emphasizes that a shift from a “box-ticking” compliance approach to a focus on effectiveness is critical in addressing these gaps. Ongoing monitoring, regular CDD updates, and thorough risk assessments are areas needing continued improvement.

Conclusion

ICAEW’s AML Supervision Report 2023/24 highlights significant advancements in supervising its members for compliance with AML regulations. The shift towards assessing the effectiveness of compliance procedures, rather than just their technical presence, marks a pivotal change in ICAEW’s supervisory approach. While challenges remain in ensuring comprehensive compliance across all firms, ICAEW’s robust strategies, proactive monitoring, and educational initiatives are making headway in the fight against money laundering within the accountancy profession.

This report sets the stage for future developments in AML supervision, with a particular emphasis on continuous improvement, increased collaboration with law enforcement, and a stronger focus on mitigating risks posed by professional enablers of financial crime.

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