Why conducting a tailored risk assessment within your AML procedures is so important
Under the Money Laundering Regulations, it has been a legal requirement for every accountancy firm (including sole practitioners) to conduct, document and keep up to date a firm-wide risk assessment (FWRA) since June 2017.
While it is a legal requirement, completing an FWRA is also an important part of protecting a firm from being exploited by those engaged in financial crime. It helps identify potential money laundering risks that a firm may be exposed to and, by understanding these risks, firms can implement appropriate controls and procedures to mitigate them effectively.
ACCA has released an updated AML firm-wide risk assessment technical factsheet. This update addresses concerns identified through our monitoring activities that members are not adequately tailoring the template, leading to inaccuracies regarding the firm’s specific controls and procedures.
ACCA’s monitoring activities have found a correlation between firms using FWRA templates (from ACCA and other third parties) and having this control assessed as partially or non-compliant due to not making necessary updates. For example:
ACCA acknowledges that templates can be useful and using them is not an issue; however, they must be accurately tailored to reflect the unique risks that the firm is exposed to and the specific procedures of the firm to mitigate them. Tailoring a template will support compliance with AML regulations and enhances the effectiveness of an FWRA.
Members are encouraged to review the updated factsheet and ensure that their FWRA identifies and assesses the money laundering risks that the firm is exposed to. Guidance on money laundering risks that you may encounter can be found within the factsheet.
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