An industry under review
In recent years, Finansinspektionen has tightened its grip on money laundering through a number of changes in regulations and guidelines, as a result of numerous leaks and scandals that have shown money laundering taking place, primarily through banks. The changes have meant that new industries and businesses now fall under the Money Laundering Act (Penningtvättslagen), which requires compliance with regulations and for many, a new level of customer knowledge. It is no longer enough not verifying critical business data about your customers, blindly trusting the customer's own answers or failing to follow up on signals that seem suspicious.
For some time now, accounting and auditing agencies have also been included in the rules and regulations of the Money Laundering Act. The industry is now expected to be able to demonstrate "good customer knowledge", as well as carry out regular inspections and checks of its customers, in order to prevent the risk of the business being used as a tool for, among other things, money laundering and terrorist financing. We have compiled information and guidelines from the Police, Revisorsinspektionen and Finansinspektionen, in order to develop a recommendation for customer knowledge for those who work in auditing and accounting. Enjoy!
Do not risk participating in criminal activity
Internationally, criminals are known to use auditing and / or accounting services when converting dirty money to clean money. Sweden is no exception, the assessment is that the services that auditors and accounting consultants provide, such as advice and certificates, can be used in arrangements for money laundering and terrorist financing, even in the small country in the north. Through the work of the auditor or accounting consultant criminals can, among other things, achieve legitimacy for illegal transactions and make false documents and invoices appear to be correct.
Participation in criminal activity such as money laundering can result in fines and revocation of licenses, but also imprisonment for up to six years for more serious crimes, often in the case of systematic violations over a longer period of time. Therefore, it becomes extra important to check customers, verify important information and ensure that this is done on an ongoing basis and being well documented.
What is money laundering?
Money laundering involves measures taken to conceal or turn money or the origin of other assets into criminal activity. For example, it could be money from drug offenses, tax offenses or fraud that is "laundered" in order to be used in the legal economy.
What is terrorist financing?
Financing terrorism means financially supporting terrorism by collecting, providing or receiving money or other property to finance terrorism.
As an auditor or accountant, it is important to be vigilant about certain obvious warning flags, which may indicate that the client is involved in money laundering or terrorist financing. This is what you need to look out for:
- It is difficult to verify the customer's or its representative's identity and / or contact details. For example, if the customer is unwilling to provide details about their identity, uses a PO box and / or has vague address information.
- The customer can only provide a copy of passport and / or identity documents.
- The customer uses foreign identity documents that are known to be forged often or that are difficult to verify in connection with customer control.
- The customer is established in a country outside the EEA that the EU Commission has identified as a high-risk country.
- The customer or the customer's beneficial owner is a person in a politically exposed position (a so-called Politically Exposed Person or PEP), a family member or known employee of such a person.
- Business relationship established at a distance and / or where the deputy / representative is not present in person. For example, where the customer has authorized another person to represent him.
- The customer's representative has previously been active in several short-lived companies.
- Suspected decoy conditions where it seems as if the customer is acting on behalf of someone else. For example, if the customer seems to be monitored during contacts.
Guide: This is what you need to do to ensure AML compliance
- Perform a general risk assessment of how your own business can be used for money laundering or terrorist financing, and create routines for how to manage these risks.
- Document routines and guidelines regarding your measures for customer awareness, monitoring, reporting and for the processing of personal data.
- Establish a special risk assessment for each individual customer (so-called customer risk profile).
- Identify and have a good knowledge of your customers (KYC).
- Monitor ongoing assignments and individual transactions in order to detect deviant activities and then, when appropriate, deepen the examination of circumstances that may indicate money laundering or terrorist financing.
- Report suspected cases of money laundering and terrorist financing to the Financial Police.
- Preserve documents and information regarding customer awareness, monitoring, and reporting for at least 5 years.
- Continuously provide employees with relevant training and information in the field.
- Take action to protect employees from threats or hostile actions.
- Establish an internal control in order to ensure the quality of the work against money laundering and terrorist financing.
Example of KYC report
Sound difficult and complicated? It's easier than you think! This is an example of a KYC-report that you can perform, print and archive to ensure compliance. All through a simple click in our web platform Roaring Web:
- PEP & Sanctions Lists check for board members
- PEP & Sanctions Lists check for beneficial owners
- PEP & Sanctions Lists check for alternative beneficial owners (if BO doesn't exist)
- Signatory Rights
- Financial Information
- Basic Company Information + Business Description
- Company Ownership