The violent international crime syndicates depicted in TV shows such as McMafia and Narcos may seem like a far cry from Welsh business. However in a globalised age we all have a role to play to ensure all economic activity is legitimate, legal and transparent rather than lurking in the shadows. Professional accountants in particular are the first line of defence when it comes to upholding ethical standards and tackling illicit transactions.
That is why ACCA has been proud to support the ‘Flag It Up’ campaign this month. The initiative is led jointly by the Home Office and the National Crime Agency and seeks to raise awareness of the impact of money laundering. The NCA warns that its estimate of the total money laundered in the UK of anywhere between £36 & £90bn may be only be a fraction of the true figure.
Money laundering in business crosses borders beyond the UK alone, funding cruelties from human trafficking to terrorist financing. Accountants and legal professionals have a key role in to play in tackling it: both as expert observers who can spot potential red flags and as potential targets for those seeking to subvert regulations.
All businesses have a role in ensuring anti-money laundering (AML) requirements are met. For small businesses in particular they will often rely on their accountant to ensure compliance and provide robust ethical guidance.
The Flag It Up Campaign advises professionals to pay particular attention to red flags:
Clients – are they overly secretive or evasive? Do they refuse to provide all the necessary information and documents? Are there inconsistencies in what they say?
Funds – is the amount and source of funds unusual? Is the client using multiple bank accounts or foreign accounts without good reason? Are the funds received from or sent to high-risk countries?
Transactions – are there discrepancies in client transactions? Is the client involved in transactions which do not correspond to their normal professional or business activities? Are the transactions unusual because of their size, nature, frequency, or manner of execution?
If so, they are urged to file a Suspicious Activity Report with the NCA.
It is vital that practising accountants have a strong understanding of these issues. In the case of ACCA members, they are obliged to report suspicions of money laundering and terrorist financing (including overseas terrorism) and carry out and maintain records of the compulsory internal staff training on money laundering.
One of the key compulsory areas of learning for all of our students, alongside the various technical and business-related components of their training, is an ethics module. ACCA was the first to introduce a compulsory ethics module in 2007 and recently unveiled an enhanced Ethics and Professional skills module – our latest innovation to the top level of the qualification.
Given the rapid pace of technological development in business, it is also vital that professionals are able to display judgement around potential risks. For instance, ACCA has recently issued new guidance to members around the potential for money-laundering around cryptocurrencies such as Bitcoin.
The pseudonymous nature of such currencies offers clear potential for misuse and abuse. While such new technologies were until recently largely of interest to specialist investors, popular interest in trading currencies has soared along with the price. At the end of last year, following the huge rise in the value of Bitcoin, a Newport-based IT consultant claimed to have inadvertently lost nearly £75 million in Bitcoin when he threw his old hard drive away in 2013.
Obviously we should not presume that the vast majority of investors are doing anything illegitimate. Most importantly we shouldn’t also apply a cynical attitude to the potential of the blockchain technology which underpins cryptocurrencies, which could have revolutionary impacts for how we do business. Groups such as Bitcoin Wales have sprung up across the UK seeking to educate people about Bitcoin and digital currencies so that the benefits can spread wide across Wales.
Ethical responsibility involves ensuring suspicious activity is highlighted whilst genuinely innovative economic activity is not unfairly impeded.
It is just this sort of decision-making which requires an increasingly developed skill-set for the modern accountant. The profession should see such new fields as both needing immediate ethical guidance but also opportunities to diversify and specialise in new areas.
As Wales continues to grow as a financial hub, there will always be those who seek to exploit opportunities for criminal gain. Often, they will be just as innovative and creative as those working in lawful businesses. That is why it is so important to have professional accountants who possess the same excellence in digital skills as they do in technical compliance.
It is also why putting ethics at the profession has never been so important and making sure that all those in business remain vigilant over their responsibility to acting in the public interest.
For more information on the Flag It Up campaign then please visit https://flagitup.campaign.gov.uk/
Lloyd Powell is Head of ACCA Cymru Wales
