Accountants play ‘major role’ in reducing corruption
A new study has found a link between the percentage of professional accountants in the workforce, and more favourable scores on the main global measures of corruption.
The report from the International Federation of Accountants also found that the work of professional accountants “is crucial to the governance architecture of economies, and along with other key elements serve to underpin transparency, accountability, and the rule of law.”
According to the report, accountants operating in G-20 countries and member nations of the Financial Action Task Force have the greatest impact in tackling corruption, money laundering and combating the financing of terrorism and proliferation standards.
“The study confirms that the accountancy profession is a crucial part of strong national governance architectures that confront corruption, in partnership with good government and strong businesses,” said Fayez Choudhury, IFAC Chief Executive Officer.
He continued: “Meaningful progress in this age-old fight will require three things: continued strong cross-sector collaboration; reinvigorated international interest in public financial management; and greater adoption of high-quality international standards on financial reporting, auditing, and ethics.”
According to estimates from the Centre for Economics and Business Research (Cebr), IFAC members make up one-third of the global accountancy network, almost 3 million people.
Understanding and addressing the impact of money laundering
Serious and organised crime costs the UK economy £24 billion each year and we know that criminals target accounting professionals to help them, often unknowingly, hide the proceeds of these crimes. In order to tackle this, the UK government is working with ICAS and other professional bodies to run the cross-sector anti-money laundering campaign, “Flag It Up”.
The campaign aims to highlight the threat from money-laundering and provide best practice advice and guidance on risk-based due diligence, with previous activity successfully driving increased interest in and engagement with online anti-money laundering guidance by professionals within accountancy.
For accountancy professionals, the wider impact of money laundering can appear abstract, but there are potential consequences of money-laundering for your job, the economy, and society.
The consequences of being personally involved – wittingly or unwittingly – can be severe. Financial penalties, loss of licence and criminal sanctions including prison time should certainly sharpen the mind when it comes to being vigilant about the risks posed by both new and existing clients.
Involvement in money laundering can also have serious knock-on reputational and professional costs.
Most importantly, the ripple effect of money laundering actively damages communities, as well as the economy. Serious and organised crime costs the UK an estimated £24bn each year, and destroys lives.
Ultimately, the vast majority of accountants want to do the right thing to protect themselves and their profession. It’s not worth the risk to overlook discrepancies, no matter how minor they may seem.
For CAs in practice or working in the regulated sector, undertaking effective due diligence throughout the life cycle of a client relationship, and flagging suspicion by submitting a Suspicious Activity Report (SAR) if you encounter any red flags, are significant steps towards tackling money laundering in the UK.
Read more about anti-money laundering best practice and SARs reporting