Creating a AML Compliance Programme: An Accountants Experience

By Marion Garlick, Director of Gilligan Sheppard


Thinking back to when legislation was first introduced, the task of understanding and implementing the requirements of the AML Act was a daunting concept. As is necessary, the consequences of not complying or simply getting it wrong, can result in serious reputational and financial costs.


With a sturdy compliance programme now in use, we can reflect on the process of creating our programme and the experience that came with it:


Step 1: Appoint a Compliance Officer


We assigned one of our Partners, Yi Ping, the task of preparing and implementing our risk assessment and compliance programme.


Step 2: Do Your Research


By attending courses and reading up on risk and compliance, we were able to gain adequate knowledge to create this programme.


An occurrence at some of these courses was the heated debate between accountants regarding compliance and the monetary cost to businesses.


This stemmed from legislation appearing as a ‘burden of extra compliance’ to some accounting practices and professionals, as many of them are small businesses and do not have an excess of human or financial resources and capital to spare on the cost of compliance.


Step 3: Stand Back and Appreciate the Positives


As we began to understand the intent of the legislation, this being based around the principle of knowing your client, we began to see some of the benefits that would come from implementing our compliance programme.


Having a greater understanding of who our client was, by knowing their background, family relationships, full names, dates of birth and current addresses, provides us with the information we need to be able to advise our clients and communicate with them. This is something we should do as part of our usual business practices, to gather this information in a concise and cohesive manner.


After the initial “OMG how do we do this?” we applied the “how do you eat an elephant?” approach, which is one bite at a time


Reap the Rewards


Having a greater understanding of who our client was, by knowing their background, family relationships, full names, dates of birth and current addresses, provides us with the information we need to be able to advise our clients and communicate with them. This is something we should do as part of our usual business practices, to gather this information in a concise and cohesive manner.


The process of implementing AML has provided us with an opportunity to update key information for our existing clients and improve our onboarding system for all new clients that not only meet the requirements of the AML legislation but helped us to better understand who our clients are.


In turn, the process has resulted in our clients learning more about us and the services we can provide for them.


Once we gather the information we need as a practice and identify what services the client requires, we then consider whether any of the services are “Captured Activities” and complete any additional checks to meet AML requirements.


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Captured Activities for Our Practice


1. Acting as a formation agent for legal persons or legal arrangements.


This being the process of forming companies, trusts and limited partnerships.


2. Acting as, or arranging someone to act as a nominee director, nominee shareholder or trustee.


When any company personnel that act as director, trustee or nominee shareholder for Gilligan Sheppard clients in a professional capacity, Customer Due Diligence (CDD) is required on the individual.


3. Providing an office or address for the use of a company or legal arrangement.


Where a small company uses our business address as its registered office address and/or address for service. In this case, we do not provide them with any other services.


4. Managing client funds, accounts, securities, or other assets.


This can come in many forms, such as a bookkeeper assisting in the set up of transactions that will later be authorised by the client. This activity also involves when any company personnel are a signatory for a client’s bank account and authorise fee payments or when clients using our company trust account to receive funds or make a payment.


5. Engaging in, or giving instructions on behalf of a customer to another person, for a range of specified services


"Overwhelming as it may seem, the creation of a compliance programme is achievable by breaking down the process to a manageable level."


Time for Reflection


Two years in and we have our compliance programme solidly in place; we have completed our first audit and as is to be expected, we have learnt a lot.


Reflecting back on what we may have done differently in the structure of our programme, the main change would have been to engage with our auditor earlier. Doing so would have resulted in any improvements or omissions being rectified sooner, and identifying whether or not there were sufficient in house resources to do so.


If practices are unable to create a versatile and complete compliance programme, outsourcing your customer due diligence is an alternative, to work in collaboration with providers who already have efficient schemes in place.


As overwhelming as it may seem, the creation of a compliance programme is achievable by breaking down the process to a manageable level, and realising the strengths and weaknesses of your practice. Doing your research on compliance and the variability of risk is paramount, and you will soon find that the cost of ensuring compliance doubtlessly outweighs any potential retributions and damage to the reputation of businesses.


Marion Garlick Image

Marion Garlick is an experienced financial sector professional who has worked previously with IRD, and specialises in taxation, financial and management accounting, restructuring, estate planning, and solvent liquidations.


Having joined Gilligan Sheppard in 2006, Marion was appointed Director 5 years later in 2020. Marion is also a member of the CPA Public Practice Committee and is Chair of the Trust, Integrity, and Compliance Company (TIC).


For more information on compliance programmes visit the Department of Internal Affairs website, or check out how The TIC Company can help with your Accountancy obligations.