Are accountants ‘ﬁnancial supergrasses’?
Some may feel reporting trusted clients for small AML irregularities is treachery, but Faisal Sheikh argues that accountants must adhere to their role as gatekeepers of the financial system.
During the Troubles in Northern Ireland, arrested paramilitaries who co-operated with the Royal Ulster Constabulary were provided immunity in exchange for information and became known as ‘supergrasses’.
Talking to practising accountants, I get the impression that they feel like ‘ﬁnancial supergrasses’ when it comes to Anti Money Laundering (AML). Why?
Colleagues complain that it takes time to build up trust with a client, and reporting them may be viewed as ‘treachery’. Accountants argue that sometimes HMRC is already aware of a suspicious matter, so they don’t bother submitting a Suspicious Activity Report (SAR) because it would serve no purpose and only jeopardise a long-standing relationship.
This growing sentiment is backed by the following statistics: analysis of the 463,938 SARs submitted between April 2017 and March 2018 shows that only 5,140 came from accountants and tax advisers – a paltry 1.1 per cent of the total.
Are accountants justiﬁed in their stance? In my opinion, no.
There is a risk of reputational damage, ﬁnes and even prison in not complying with AML rules, so this low engagement implies a lack of AML education - which can be addressed through CPD.
The wellbeing of ﬁnancial markets and a healthy ﬁnancial system is dependent on the production of robust ﬁnancial information. Hence accountants work in the public interest, and must adhere to the law at all times.
Not disclosing information or suspicion is itself a grave money laundering oﬀence. Granted, the system is not perfect. But home secretary Sajid Javid recently announced a commitment of £3.5 million to reform the suspicious activity reporting regime.
Practising accountants are not ‘ﬁnancial supergrasses’ but the proud gatekeepers of the ﬁnancial system, so complete an SAR whenever you are suspicious or have information.
Faisal Sheikh is an accounting and ﬁnance lecturer at Salford Business School, and a fellow of the IFA