by John McCarthy Consulting Ltd. | Mar 14, 2022 | Blog, News
In several recent blogs we looked at some examples of money laundering in practical day to day business life.
Here are some more examples from the latest Consultative Committee of Accountancy Bodies (CCAB) AML Guidance released on 4 March 2022.
Some customers of your client have overpaid their invoices. The client retains overpayments and credits them to the profit and loss account. Do I need to report this as money laundering or not?
Obviously the circumstances can vary and the CCAB guidance is not to be interpreted as giving legal and definitive advice. The scenarios outlined a merely there for the purposes of illustrative guidance and for educational purposes.
The circumstances will influence whether to report this matter for money laundering purposes or not.
Report the matter if you:
- know or suspect that the client intends to dishonestly retain the overpayments. Reasons for such a belief may include:
- The client omits overpayments from statements of account.
- The client credits the profit and loss account without making any attempt to contact the overpaying party.
You may not need to report the matter if you:
- believe that the client has no dishonest intent to permanently deprive the overpaying party. Reasons for such a belief may include:
- Systems operated by the client to notify the customer of overpayments.
- Evidence that requested repayments are processed promptly.
- Evidence that the client has attempted to contact the overpaying party.
- The client has sought and is following legal advice in respect of the overpayments.
These situations are not usually clear cut and legal and professional advice may be necessary to fully understand your obligations.
We have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
by John McCarthy Consulting Ltd. | Mar 7, 2022 | Blog, News
On Friday 4 March 2022 the Consultative Committee of Accountancy Bodies in Ireland (CCAB-I) issued updated guidance applicable to accountants in practice for immediate use.
The Guidance is a widely respected and hugely valuable document among accountants as it sets out the minimum criteria that must be adhered to in order to comply with the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 (‘the Act’) in the Republic of Ireland.
Key changes in the legislation are reflected in additional guidance in areas such as:
- Greater emphasis on identification of beneficial owners of businesses;
- Expanding the definition of tax adviser, letting agent and intermediaries at art auctions;
- The definition of a Politically Exposed Person (PEP) to include any individual performing a prescribed function;
- There is a specific list of enhanced due diligence measures that the designated person is required to apply when dealing with a customer established, or residing, in a High-risk third country;
- The new requirement in place since 23 April 2021 that prior to commencing a business relationship is established, reasonable steps must be taken to verify the beneficial ownership of corporate clients including confirming the beneficial ownership with the relevant Central Register. Where a Designated person identifies a ‘discrepancy’ (as defined) in the Act, i.e. where the entry is inconsistent or incorrect between its own records and those maintained by the Central Register, it must notify the relevant Registrar.
- There is a similar requirement to notify the relevant Registrar where there is evidence of ‘non-compliance’ (as defined) in the Act, i.e. where the register is blank, it must notify the relevant Registrar.
A copy of the guidance may be accessed here.
Specially tailored up to date AML Training that meets the requirements of the legislation is available on request, on Zoom, in person or as a hybrid event, with a free video recording supplied afterwards, for future viewing. Contact john@jmcc.ie for further details.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
We also have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
by John McCarthy Consulting Ltd. | Feb 21, 2022 | Blog, News
Have you checked what companies are registered at your office address, lately? Well, maybe now is a good time!
Police sometimes describe the practice by which drug dealers take over someone’s home (often a vulnerable person) as a base for their activities as ‘cuckooing’. It now appears that this phenomenon has ‘come home to roost’ in some accountancy firms – at least in the UK.
According to a 2021 report in the SARS in Action magazine of the National Crimes Agency the new style of cuckoo uses an accountancy firm’s address as a registered office address without the knowledge or consent of the firm.
The most likely explanation for using the accountancy firm’s address is that it provides credibility which may be used to facilitate fraud. In many cases, the company will combine using the address with a Post Office redirection arrangement so the accountancy firm will not receive any mail which might trigger an investigation.
And it gets worse. Sean Kavanagh from leading company formation agency, Company Formations International in Ballsbridge explains that it is impossible to have a fraudulent Registered Office removed from your address as the CRO do not have any legislative basis for doing so, and therefore don’t.
CRO personnel went before the Oireachtas Committee for Enterprise, Trade and Employment to discuss this and other anomalies including full blown identity theft in December 2021. We still await some positive developments from this meeting.
You have been warned!
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
We also have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
by John McCarthy Consulting Ltd. | Feb 21, 2022 | Blog, News
There is currently no specific modern legislation dealing with co-operatives in Ireland. The Industrial and Provident Societies (IPS) Acts 1893-2021 come from another century and do not mirror up to date company law principles. Currently there are 960 Industrial and Provident Societies registered, comprised mainly of various agricultural co-operatives, group water schemes and housing co-operatives.
There are many aspects of good practice set out in company law (in the Companies Act, 2014) that are applicable to co-operatives, either directly or with adaptation.
Consequently the Department of Enterprise, Trade & Employment commenced a consultation on 28 January 2022 on proposals to update the IPS legislation.
Amongst the proposals, it is intended that:
- The legislation will cross apply six parts of CA 2014, with amendments needed to adapt to the particular circumstances of co-operatives, relating to:
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- Examinership and
- Winding up (both of these are already cross-applied in the current IPS Acts);
- Investigations;
- Compliance and Enforcement,
- Receivers and
- Financial Statements.
- The legislation will generally replicate, with some amendments, provisions from other Parts of the Companies Act, 2014 i.e.
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- Directors’ Duties;
- Charges and Debentures and
- Functions of the Registrar.
- The legislation will also use the relevant parts of Companies Act, 2014 to give assurance to stakeholders in areas dealing with
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- Registration;
- Corporate Governance
- Mergers and
- Strike-off and Restoration.
There are just 12 questions in this consultation and the response deadline is 5pm this Friday 25 February 2022 and responses must be sent to coopconsultation@enterprise.gov.ie.
The full consultation (and response template) is available here.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
We also have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
by John McCarthy Consulting Ltd. | Feb 8, 2022 | Blog, News
In last week’s blog we looked at the CCAB case study on incomplete records. This week we look at the potential AML problems that arise when a client doesn’t pay their payroll taxes and VAT (suitably edited for local Irish legislation).
The pandemic crisis has put strain on the cashflows of many businesses. This note considers the obligations that an accountant may have if they become aware that a business that they work for, or one for which they act, is deliberately failing to pay their taxes when due.
- Payroll taxes are deducted from the wages/salaries of employees by the employer. It is the employer’s obligation to account for these taxes to the Revenue Commissioners within the prescribed time limits. The Revenue Commissioners may be willing to agree to instalment arrangements where certain conditions are met, but these arrangements should be agreed in advance. If a business fails to pay its payroll taxes by the due date, interest is levied and there can also be penalties, depending on the circumstances.
- VAT is levied on sales to customers and collected when payment is received. VAT paid on goods and services used in the business can (in many cases) be offset in whole or in part against the tax collected from customers.
In general, late payment is a civil matter. But at what point does late payment become non-payment and when might this become a criminal matter?
If steps have been taken to disguise the true tax liability, then this is fraud and would be criminal behaviour. For example:
- some employees are not included in payroll returns;
- the amount shown on the payroll return differs from the amount actually paid to the employee; or
- VAT on sales is deliberately understated.
However, there are other cases where the business simply chooses not to pay on time.
If this is a temporary, unforeseen matter – for example, the business has overdue monies due to it and does not have the banking facilities to cover the payment, and therefore delays the payment until the debtor has paid up – this is unlikely to be criminal. In general, it is advisable to contact the Revenue Commissioners as soon as difficulty making payment is expected, to discuss the prospect of agreeing time to pay.
On the other hand, there are cases where the business is aware that it has structural cashflow issues. In these cases, it does not have the funds to pay bills as they fall due, but uses the funds withheld from salaries (or in the case of VAT, collected from customers) to fund other expenses, with no plan for payment of the tax due.
Depending on the facts, if the business subsequently becomes insolvent with tax due, it should be considered whether this is fraudulent evasion of tax. The business may be in possession of proceeds of crime, which would mean that an accountant acting for that business would have obligations to report the money laundering activity.
There are some key red flags to be alert to:
- Has there been any deliberate attempt to disguise the amount of tax due?
- Has there been a deliberate, reckless or wilful use of funds which should have been earmarked for tax payments to meet other obligations?
- Has there been non-payment of tax and continuation of the trade in circumstances which should have indicated that the business could not meet its obligations as they fall due?
Where these factors are present, you should consider whether a Suspicious Transaction Report (STR) should be made simultaneously to the Garda/Revenue Commissioners on GoAML and on the ROS AML portal.
To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.
We also have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents click here.
