The sector in brief
Accountants prepare accounts, advise on tax and structure, handle bookkeeping and payroll and sometimes help with transactions. The AML rules apply when they carry out certain activities for clients, such as buying and selling real estate, managing client money, setting up and running companies, or organising contributions for companies.
The risk is that an accountant's work can give a business, or a set of figures, a credibility it does not deserve. Accounts that show profits that do not exist, or transactions that look like trade but are not, may be a way of explaining where the money came from.
Accountants are well placed to notice when the numbers do not fit the business. Supervisors expect them to act on that, by asking questions, escalating concerns and, where the rules require, reporting.
Where the risk sits
Inflated or fictitious turnover
A business that records more income than it earns can use accounts to explain illicit funds as profits.
Complex group structures
Chains of companies, loans between related parties and unusual transfers can hide who owns the assets.
Cash-heavy businesses
Where cash is a large part of revenue, it is harder to prove that the recorded income is real.
Services that help create structures
Helping to set up companies, open accounts or act for clients in transactions can bring the accountant into direct contact with laundering risks.
Clients seeking help to disguise
A request to change dates, invoices or descriptions to suit a story is a clear warning.
Who supervises you
Accountants and accounting firms are supervised by the Ministry of Economy and Tourism onshore, by the DFSA in the DIFC and by the ADGM Registration Authority in Abu Dhabi Global Market. Check your licence and the activities you perform, because the rules apply to specified services.
The supervisor decides the detailed rules for your licence category, so always read its current guidance alongside this page.
What supervisors expect
- A named compliance officer with authority to refuse engagements, and a proportionate programme.
- A risk assessment that covers the services provided, the sectors and the countries of clients.
- Client due diligence at the start of an engagement, including the owners and controllers and the purpose of the work.
- Understanding of the client's business, and ongoing attention to whether its figures and transactions make sense.
- Sanctions and politically exposed person screening, with documented review of matches.
- Reporting of suspicion through goAML and care not to alert the client.
- Training, record keeping and independent testing proportionate to the firm.
Red flags to watch
- A client whose accounts show profits that cannot be matched to real activity.
- Requests to alter dates, descriptions or amounts to fit a story.
- Large unexplained loans from or to related parties.
- A client with a cash-heavy business and few records.
- Frequent changes of ownership or director without explanation.
- Pressure to complete work quickly and without the usual information.
A worked example
Accounts that do not match the premises
A small shop with a modest lease and two employees engages an accountant, and provides records showing turnover several times what the premises could support, much of it in cash. The accountant should ask how the business makes that revenue, check against what the shop could realistically sell and request evidence. If the explanation is weak, the accountant should decline to prepare accounts that rest on unsupported numbers, tell the compliance officer and consider whether a report is required.
How Adventant helps
Questions answered
Do all accounting services fall within the AML rules?
The rules apply to specified activities, so check which of your services are covered. Where you are unsure, ask your supervisor, and record the answer.
What should an accountant do about suspicious numbers?
Ask the client for an explanation and evidence, record the answer and escalate to the compliance officer if it is unsatisfactory. Do not simply produce the accounts that the client wants.
Do we have to do due diligence on small clients?
Yes, in proportion to the risk. The checks can be light for a low-risk client but must exist and be recorded.
Can we tell the client we are considering a report?
No. Tipping off is an offence under the rules. Escalate internally and follow your compliance officer's advice.
What records do we need to keep?
Client identification, engagement records, the reasons for decisions and any reports or escalations, for the period required by the rules, which is commonly at least five years. Check your supervisor's guidance.