One in 10 (11%) accountants surveyed admit they currently don’t carry out beneficial company ownership ID checks, which they should be completing by law following their inclusion in 2017 guidance that details the required components for customer due diligence. A further 61% of accountants questioned are unaware of the new EU Anti-Money Laundering Directive changes already published and coming into law by early 2020.
The research, carried out by identity verification providers Credas, explores how accountancy firms conduct identity checks on clients and their awareness of the changing industry regulations. It also found that only one in five of those who are aware of the ‘AMLD5 directive’ fully understand the upcoming changes.
The AMLD5 changes include the threshold for identifying ultimate beneficial ownership of a company potentially being reduced from 25% to 10%, and all beneficial company owners needing to be verified as part of ‘Know Your Customer’ compliance.
Although the most significant change affecting accountants will be beneficial ownership, almost a quarter of respondents (24%) weren’t sure if their organisations currently verify beneficial owners at all. Accountants listed the main barrier to completing the checks as getting hold of the required identity documents, which include a valid proof of identity and proof of registration. Rhys David, CEO of Credas, said: “As new security threats, and therefore new regulations, emerge in the financial services sector, it’s crucial that accountancy firms take all the necessary steps to protect their business interests and their customers, it is therefore worrying that our survey has found that one in 10 aren’t carrying out legally required ID checks.
“Our research also shows that a large number of accountants aren’t aware of the latest changes and are failing to carry out their due diligence requirements, but as the EU tightens its grip on money laundering and investigations are on the rise, businesses really can’t afford to be complacent.”
He added: “What’s also concerning is that we have less than a year left until AMLD5 comes into force, and so the process for carrying out beneficial ownership checks needs to be as efficient and watertight as possible to ensure that accountants are at zero risk of financial penalty.”
The fifth edition of AMLD was published in 2018 and aims to crack down on money laundering and terrorism financing in Europe. Under the directive, firms must provide the public with access to beneficial ownership information and take sophisticated due diligence measures to monitor transactions with high-risk countries. David said: “With financial fraud showing no signs of slowing down, accountancy firms need to be mindful that there are new solutions out there to mitigate vulnerabilities and respond to the changing legal landscape.
“Using multi-factor authentication technology and an extensive database of insights, our products can verify over 4000 types of global ID and more importantly, allow clients and beneficial owners to verify their identity remotely – meaning significantly less time waiting for identity documents to be provided and a quicker, easier verification all around.” Credas facial recognition technology allows companies to carry out simple, compliant AntiMoney Laundering (AML) and Know Your Customer (KYC) checks quickly and securely. It is compatible with all mobile devices (iOS and Android), ensuring that the verification process
can happen at any time that’s convenient.
The survey of 250 people working in the accountancy sector was conducted by OnePoll between 4–19 February 2019.