AML supervision: what's in it for me?

Many articles on anti-money laundering would set the scene by laying out the importance of AML compliance. However, while we must bear in mind the UK’s position as a leading financial centre, and its vulnerability to the misuse of professional services (including accountancy services), the requirements and reasons behind the Money Laundering Regulations and the Proceeds of Crime Act are not the focus of this article. Suffice it to say that accountants occupy a unique position, acting as trusted advisers, having access to information, structuring transactions, and helping to ensure their clients comply with their obligations.

Instead, the focus of this article is to offer some answers to the question ‘What’s in it for me?’ when it comes to AML supervision. At a very basic level, AML supervision is essential for any accountancy practice - not only to meet its legal obligations, but also to protect the reputation of the practice. An effective supervisory framework is necessary to support, as well as enforce, AML compliance. So, AML supervision will give you access to the AML resources of the supervisory authority (as well as those available to CPAA members). Therefore, your interest in being supervised (and knowing who your supervisory authority is) includes:

• legal compliance – meeting your statutory duties and avoiding fines, adverse publicity and even criminal liability

• risk management – understanding the risk that your practice will be exploited by criminals to disguise criminal activity

• professional credibility – reassuring clients, banks, regulators (and even HMRC and Companies House) that the firm maintains high standards.

The remainder of this article highlights three specific examples of why you should engage positively with your supervisory authority and, fundamentally, why you need to know who your supervisory authority is. If you, or another principal in your practice, is a member of a professional body identified in the Money Laundering Regulations, then it is likely that the practice is supervised by that professional body. Otherwise, your practice should be supervised by HMRC. You can check whether this is the case by downloading the Supervised Business Register from the gov.uk website (here).

1. Failure to be supervised by HMRC

Failure by an accountancy practice to register with an AML supervisor is a criminal offence and can also lead to civil penalties. For example, HMRC, as the default supervisor for accountants, has the power to issue fines and other sanctions for non-registration. In some circumstances, you could be legally barred from providing accountancy services. If you are unsure who your AML supervisor is (or should be), the chances are that it should be HMRC. What is clear is that you must find out.

HMRC publishes details of businesses not complying with the Money Laundering Regulations. In the six months to 31 March 2025, 336 businesses were fined, resulting in more than £3.2 million in penalties. Of those businesses, 91 were accountancy practices, accounting for £539,000 of fines. Across all businesses, the most common breach was failure to register at the required time. If you are concerned about your own failure to register, there is nothing to be gained from delaying registration further. On the contrary, financial penalties are usually reduced for voluntary disclosure of a breach. HMRC ‘polices the perimeter’ to identify relevant persons not currently subject to AML supervision. So, this is an important subject, and firms would be well-advised to remedy, as soon as possible, any failure to be supervised.

2. Dealing with HMRC

Ensuring you know now who your AML supervisor is can avoid more significant challenges later. Not only can it reduce any financial penalties that may be imposed; it can also pave the way for smoother interactions with HMRC. In recent years, HMRC has been undertaking a project to seek to raise standards in tax advice. A recent output is the policy paper, ‘Requirement for tax advisers to register with HMRC and meet minimum standards’, which outlines significant reforms aimed at enhancing the regulation of tax advisers in the UK. It is intended that it will better enable HMRC to monitor tax advisers (ie those who provide professional tax advice and services), and exclude any who do not meet HMRC’s Standard for Agents.

With effect from 1 April 2026, tax advisers (with only limited exceptions) will be required to register with HMRC. Guidance will be issued to tax advisers to help them prepare for the new requirements. Any tax advisers who do not meet the minimum standards or registration conditions will be suspended from interacting with HMRC on behalf of clients. And HMRC will be able to apply sanctions if a tax adviser attempts to circumvent the registration requirements.

A digital registration process will be made available, through which tax advisers (ie firms) will be required to provide annual assurances, including assurance of the firm’s AML supervision status. The policy paper asserts that this should not present a problem, as most tax advisers are already required to be supervised for AML compliance to operate legally. So now is the time to ask yourself who supervises you for AML compliance, and how can you evidence the fact? HMRC is likely to accept either an AML supervision reference (if issued by your AML supervisor) or a formal confirmation of supervision, such as a letter or certificate.

3. Dealing with Companies House

Many firms of accountants are accustomed to filing accounts and other documents with Companies House on behalf of their clients. If that includes you, then you must ensure you are prepared for changes, just around the corner, brought about by the Economic Crime and Corporate Transparency Act 2023. In short, there will be new responsibilities for:

·        company directors,

·        people with significant control of a company (PSCs), and

·        anyone wishing to file information on behalf of a company.

Many of the changes involve identity verification and, since March, accountants and other relevant persons (registered for AML supervision) have been able to register as Authorised Corporate Service Providers (ACSPs). This will allow those firms to perform verification checks in relation to their clients and provide the relevant details to Companies House. Not all firms will wish to provide that service, as relevant individuals will be able to verify their own identity. Nevertheless, from 18 November this year, directors and PSCs will start to be required to have their identity verified.

Furthermore, starting in the spring of next year, Companies House intends to make compulsory:

·        identity verification of those filing information on behalf of companies, and

·        registration as an ACSP of any agents filing information on behalf of companies.

This last point will provide a wake-up call to some accountants who would wish to continue providing a comprehensive service to their clients. They will need to register as an ACSP (if they have not already done so). The senior person in the practice registering the practice as an ACSP will be asked to verify their identity and provide information about the practice, including (of course) evidence of AML supervision.

Conclusions and action points

I have sought to highlight here some reasons why you, as a principal in an accountancy practice, must be clear who supervises you for AML compliance, and to address the question of ‘What’s in it for me?’. Without the required supervision, you risk financial penalties, lost chargeable time, personal stress and reputational damage. But you should also be aware of the future importance of AML supervision if you wish to be able to:

·        continue to file documents at Companies House on behalf of your clients and/or

·        gain recognition by HMRC as a tax adviser.

It is essential that you ensure you are supervised for AML compliance. If you are currently unsure, it is likely that you should be supervised by HMRC – the default supervisor for accountants – and you should check that you are on the HMRC register. You should do this as soon as possible, as HMRC imposes significant financial penalties on unsupervised firms.

It is worth remembering that money laundering is not a victimless crime. It enables serious organised crime, such as drug trafficking, human trafficking and modern slavery, terrorism and child sexual exploitation. Every pound laundered represents increased suffering for victims of crime. If you think that has nothing to do with you, and that you know your clients well enough to know there is very little risk, then your practice will be a magnet for someone wishing to exploit a small accountancy practice that is less vigilant than other firms. Engagement with your AML supervisor, and the resources they provide can make it easier for you to identify the risks to which your practice is exposed. Do not fool yourself into thinking those risks are negligible.

CPAA is not an AML supervisor, but nevertheless provides resources to support its members in complying with their AML obligations. If you have any questions or concerns regarding your firm’s AML compliance – including achieving the required registrations – your first port of call might be CPAA’s AML Helpline, which is accessed via email (aml@cpaa.co.uk).