Isle of Man issues AML guidance tailored for tax advisors and accountants
The guidance reflect changes made in July to the IOMFSA's new edition of its AML compliance handbook, the Anti-Money Laundering and Countering the Financing of Terrorism Handbook. The handbook reflects the Anti-Money Laundering and Countering the Financing of Terrorism Code 2019 (the Code) and the updates made to the Isle of Man's National Risk Assessment (NRA) in August 2020.
That NRA assessed the level of risk for money laundering as medium-high, because of the comparative size of the accountancy sector in the Isle of Man, the wide breadth of activities, the range of businesses from sole practitioners up to large international firms and the attractiveness of the sector to criminals. The risk of terrorist financing, however, was assessed as medium-low.
The new guidance covers the unique money laundering and financing of terrorism risks faced by the sectors and provides further guidance in respect of approaches to customer due diligence. Although it is not legislation in its own right, it is ‘persuasive in respect of contraventions of AML/CFT legislation.’
Under the Code, accountants, tax advisors and the wider financial services sector should use three risk assessments to adopt a risk-based approach: namely a business risk assessment, a customer risk assessment and a technology risk assessment. The guidance notes various vulnerabilities that accountants and tax advisors should be aware of when assessing the risks of the services provided. These include:
- criminals seeking financial or tax advice in order to place certain assets out of reach and avoid future liabilities;
- accountants being approached to carry out or facilitate financial transactions that may be on behalf of a criminal. Such transactions could include depositing cash, withdrawing from accounts, issuing/cashing cheques or receiving international fund transfers; and
- criminals seeking to use accountants to legitimise an introduction to a financial institution. This is equally a vulnerability for financial institutions that may be used to facilitate introductions to accountants or tax advisors.
The guidance provides a list of risk indicators that would require the advisor to ask the customer to give a satisfactory explanation. It also lists 'red flags' that may indicate suspicious customer activity, any of which would require the advisor to take appropriate protective steps.
Separate sets of sector-specific guidance have been issued for high-value goods dealers, moneylenders, providers of financial guarantees and commitments, estate agents, banks, collective investment funds and their associated functionaries and money transmission services.
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