ECSH52600 - What is unique about visits to Accountancy service providers

What is unique about compliance visits to Accountancy Service Providers (ASPs)?

The payment of fees between an ASP and its customer would not normally be the way in which money is laundered. The money laundering (ML) risks are mainly surrounding the ability of ASP services to legitimise business activities or help to conceal money laundering activity (or other criminality). Businesses are attractive vehicles for money laundering, and services provided by ASPs can be used to help criminals gain legitimacy and respectability for business transactions and movements of illicit funds.

For example, consider an ASP providing a bookkeeping service for a customer and charging a fee for this service. The ML risks are not primarily in the payment of the fee for the bookkeeping service, rather they relate to how the customer could use the records created by the bookkeeper to present  a money laundering or other criminal scheme as legitimate business activity.

ASP services by their nature are solutions that perfectly legitimate businesses can benefit from, but equally could be exploited by any business to facilitate or conceal money laundering, terrorist financing or proliferation financing (ML/TF/PF). An ASP needs to understand and assess the risk that the services they provide to their customer could be used to conceal or legitimise ML/TF/PF related activity, and by providing the service the ASP could themselves be facilitating ML/TF/PF.

Whilst all sectors subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) need to risk assess business relationships with their customers; to do so an ASP will typically need to have a greater understanding of their customers business affairs to appropriately assess these risks.

The level of access an ASP has to their customers business records and transactions, and as such into their financial and business affairs, depends on the services they are providing. Some ASP services will attract sight of a customer’s bank accounts, and/or primary records, contributing to a ‘fuller picture’ of a customer’s affairs. Some may have access to a limited amount and as such be privy to a limited view of the customers affairs.  For example, an ASP providing bookkeeping and accounting services to a customer would expect to have sight of business transactions and existing accounts as well as their primary records (fuller picture). An ASP providing a standalone payroll service for a customer would not have such visibility (limited picture). More information on records at an ASP visit can be found at ECSH52650 - Accountancy service providers (ASPs) (General) - what would you expect to see on a compliance visit.