Accountants face greater regulation

Accountancy services in Britain and Northern Ireland will face greater regulation from December 15th 2007.

Companies offering accountancy, tax, audit and insolvency services will be forced to undergo monitoring for compliance by an independent professional body or by HM Revenue & Customs, providing evidence that they have proof of identity from all clients.

More rigorous due diligence will be required for high risk clients, in particular for public officials from outside the EU and for remote clients, but evidence of identity will be a requirement from all customers, even if they are well-known to the company.

The Institute of Chartered Accounts in England and Wales (ICAEW) has commented that the new laws will strengthen money laundering regulations and help to implement the EU's Third Money Laundering Directive and it added that the Treasury's consultation process was well-conducted.

The anti-money laundering legislation will mean that solicitors which offer tax advice, trust and company services as well as audit and insolvency ministration will face the new legislation.

Existing policies will have to be adapted, but otherwise company functions will not be affected if firms have good practices already in place.

Felicity Banks, head of business law at the institute, said: "Most professional accountants routinely take a risk based approach to their work, and these changes mean that a common sense approach will be in line with the letter of the law as well as professional requirements.

"For very simple firms, a simple risk assessment will be appropriate and quite sufficient. Existing clients will usually already be well known to the firm, so limited additional evidence of their identity will be required - like a copy of their tax return, or bank correspondence, which are likely to already be on file.

Karen Silcock, chair of the ICAEW money laundering working party, added: "These regulations go further than those currently in force in embedding in law certain key requirements. This should bring welcome clarity, and promote consistency across the regulated sectors, whilst retaining vital risk-based flexibility in detailed implementation."

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