Accountants have reservations about digital tools built for anti-fraud purpose, believing they are too expensive and irrelevant for smaller practices, said ACCA recently.
Only 49% of respondents ran any form of online checks on new clients — preferring to verify passport and other identity details using traditional paper methods, according to results of a survey of 278 accountants who are mainly based in the UK but there are also inputs from around the world.
- 65% still relied on manual record-keeping of physical documents.
- Sole trader accountancy businesses in particular regarded anti-fraud checks as ‘box-ticking’ exercises. They preferred to go with their instinct on judging new clients’ good character and to rely on recommendations from other clients and contacts.
As businesses struggle to survive and cash flow is squeezed, the temptation to cut corners or take advantage of some “too good to be true” opportunity will increase, said Jason Piper, head of taxation at ACCA.
“Clients who two years ago might never have considered any unlawful activity may now present a significant risk of involvement in money laundering, whether wittingly or otherwise,” he noted.
Finance professionals and their role meant they were close to the flow of money and that a single bad client can destroy the practice, ACCA warned.
Anecdotal evidence in the survey report indicated that the profession believes that the risk of them becoming entangled with criminal activity is low and they understand the checks are important, but do not rate them a high priority for their businesses, the accountancy body added.
In addition, survey results indicate that smaller practices relied heavily on their perceptions and personal recommendations, said ACCA.
“Perhaps the most significant risk comes from the over-confident accountant who assumes themselves to be capable of assessments which are not realistically within their ability,” Piper noted.