Financial Crime World

Accountants Must Ensure Operating Environment Remains Fit for Purpose

In a move aimed at preventing money laundering and terrorist financing, accountants in the Arab States have been required to submit annual reports on their risk assessments and compliance programs. The reporting entities must also undergo regular audits by independent qualified persons.

Accountants as “Gatekeepers” of the Financial System

According to new guidance issued by the International Arab Society of Certified Accountants (IASCA), accountants are considered “gatekeepers” of the financial system and may inadvertently assist money launderers or terrorism financiers. As such, they have a critical role in preventing, recognizing, and reporting suspicious activities.

Importance of Familiarity with Money Laundering and Terrorist Financing Risks

The IASCA guidance highlights the importance of accountants being familiar with the risks and crimes of money laundering and terrorist financing, as well as their role in reporting suspicious transactions to the relevant authorities. Accountants must be aware of the following:

  • The risks and crimes associated with money laundering and terrorist financing
  • Their role in preventing, recognizing, and reporting suspicious activities
  • The importance of adhering to local laws and regulations, as well as international standards

Role of Courts and Supervisory Authorities

The guidance emphasizes that courts should refer to local laws and regulations, as well as international standards, when deciding whether a business has committed an offense. It also notes that anti-money laundering supervisory authorities will likely be influenced by whether or not a business has applied the provisions of national and international AML/CFT laws and regulations.

FATF Recommendations for Accountants

The Financial Action Task Force (FATF), an international task force established in 1989, published a revised set of 40 Recommendations on Anti-Money Laundering/Combating the Financing of Terrorism measures in 2012. The Arab States have included accountants in their AML/CFT system in response to FATF recommendations.

The applicable FATF Recommendations for accountants include those covering:

  • Designated Non-Financial Businesses and Professions (DNFBPs), which include:
    • Lawyers
    • Notaries
    • Other independent legal professionals
    • Accountants when they prepare or carry out transactions for their customers concerning:
      • Buying and selling of real estate
      • Managing client money
      • Organization of contributions to the creation of companies

IASCA Guidance: A Comprehensive Set of Counter-Measures

The IASCA guidance is intended to provide a comprehensive set of counter-measures against money laundering and terrorist financing, covering:

  • The criminal justice system
  • Law enforcement
  • Preventive measures in the financial sector
  • International cooperation