This article was first published in the February 2016 UK edition of Accounting and Business magazine.

The fact that criminals use the services of accountants in order to disguise the origins of their illicit funds is nothing new. But would you be able to spot the warning signs? This is something that the ‘Flag it Up’ campaign – developed by the Accountants Affinity Group (AAG), a subgroup of the Anti-money Laundering Supervisors’ Forum, of which ACCA is a member – is encouraging accountants to think about in order to safeguard their businesses and themselves.  

The most sophisticated of criminals will have built what looks like a legitimate enterprise, with a keen eye for detail, to ensure that nothing triggers suspicion. For finance professionals, the consequences of being involved – wittingly or unwittingly – can be severe, with criminal sanctions such as a prison sentence, significant fines or even loss of their professional licence to practice. So we can’t take anything for granted when it comes to complying with the money-laundering regulations, particularly the obligations to conduct client due diligence. 

The recent conviction of Harpal Singh Gill emphasises the point. A former textile merchant, Gill turned his hand to building a criminal business empire through which he laundered £35m over a six-year period with the help of an accountant. Paul Risby, branch commander at the National Crime Agency, said that Gill ‘knowingly took advantage of the respect afforded to him, persuading [his family and local businessmen] to be part of his criminal enterprise.’

It’s important to remain vigilant and look out for the red flags by considering whether there are reasons not to trust your client, inconsistencies in the information they provide, unusual amounts or sources of funds, or discrepancies in their transactions. And there are processes that advisers can put in place to ensure these threats don’t materialise.

If something doesn’t stack up, and asking the client directly elicits answers that are evasive or don’t sound right, this should trigger suspicion. Visiting potential clients’ premises can also be revealing. 

Be careful not to be ‘blinded’ by client relationships. The length of time you have been engaged by the client and consequentially developed knowledge of their business can be an antidote to criminal enterprise – but only if you spot the signs. If a change doesn’t make sense, then seek clarification. 

It’s a good idea to conduct internet searches on the client and all beneficial owners with a controlling interest (over 25%) in any entity, in addition to other due diligence. Remember that close associates of criminals and corrupt, politically exposed persons are unlikely to share their name, and their purpose would be to distance an obvious name from their dirty money.

You should also scrutinise, where you can, the supply chain of the business, including suppliers and customers. If there are cross-border business dealings, you should evaluate the impact that these might have on your exposure; Transparency International’s Corruption Perception Index is a good starting point. The Financial Action Task Force also evaluates all jurisdictions for their anti-money laundering compliance and is due to conduct an in depth investigation into UK systems and processes in 2017; it is therefore in the interests of British firms to get up to speed with this organisation’s work and standards.

The best way to disrupt a threat is to terminate access to professional services. This is a legal requirement if you cannot complete your required due diligence (Money Laundering Regulations 2007). However, it is not enough in isolation. Where you are suspicious, you are also legally required to report suspicious activity. Remember that you might well be holding the final piece of law enforcement’s jigsaw.

The criminal’s aim is to be a chameleon in the legitimate regulated sector and they are only limited by their imagination. Don’t be unwittingly abused because ‘my clients don’t do that’.

Tania Hayes is chairman of the Accountants’ Affinity Group and head of conduct and compliance at the Association of Accounting Technicians