The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (known as Money Laundering Regulations (MLR) 2017) came into effect on the 26th June 2017. These replace Money Laundering Regulations 2007 and create additional obligations for tax practitioners. For an introduction to the changes brought in by MLR 2017 please refer to AML newsletter 19. If you are a principal in a firm of auditors, external accountants, insolvency practitioners or tax advisers you will need to ensure you are supervised by a supervisory authority to be monitored for compliance with the money laundering legislation.
Q: Who needs to be supervised by a supervisory authority?
If you are carrying on a business in the tax and accounting sector you or your firm must be supervised. In essence this means sole practitioners and principals in partnerships/limited liability partnerships and companies. If you or your firm would like to be supervised by the CIOT at least one principal in your business must be a member of the CIOT. (Principal for these purposes means sole practitioner, equity partner, or company director).
Q: Who does not need to be supervised by a supervisory authority?
You will not need to be supervised by a supervisory authority if you:
- Are an employee (but you will need to register if you provide tax or accounting services on a self-employed basis outside your employment e.g. paid weekend and evening work)
- Are a fully retired member
- Work entirely outside the UK
- Do not work in the tax and accounting sector
Q: I work in another regulated sector: Does this apply to me?
Please remember that this advice only covers members working in the tax and accounting sector. Members working in other professions or industry sectors may also need to be supervised by a supervisory authority and they should seek further guidance where necessary.
Q: Does my firm need to be supervised by a supervisory authority for Anti-Money Laundering compliance purposes?
If your firm provides 'advice about the tax affairs of other persons', the firm will need to be supervised by a supervisory authority. The meaning of 'advice' is widely interpreted and it would be prudent to take the view that tax compliance services come within its definition.
7. Can my firm be supervised by the CIOT?
Your firm may apply to be supervised by the CIOT if at least one principal in the firm is a member of the CIOT.
Q: How will my clients know that my firm is supervised by the CIOT?
The firm may use the following wording on its practice stationery or website:
'Supervised by the CIOT for the purposes of Anti-Money Laundering legislation'.
Q: What happens if the only principal who is a member of the CIOT leaves and the firm no longer has any members of the CIOT at principal level?
The firm should notify the CIOT straight away (and in any event no later than 30 days after the principal leaves). The CIOT will advise whether the firm will be de-registered or will be allowed to remain on the CIOT register until the next renewal of registration. If the firm is de-registered it will have to register with another supervisory authority. HM Revenue & Customs are the default supervisory authority for tax practitioners.