Anti-money laundering and accounting: 2024 predictions

The National Crime Agency estimates that between £36 billion and £90 billion is laundered in the UK currently. In light of this, the long awaited Economic Crime and Corporate Transparency Act has finally passed, bringing much needed reforms, including robust improvements to Companies House and its powers to verify the information that is registered there.

This is much needed, but 2024 will bring with it further changes and requirements. As criminals become increasingly sophisticated in their attempts to launder money, regulation will need to stay one step ahead. It’s critical that these reforms are seen as another step in the continuing fight rather than a definitive fix.

The Act will expand the fining powers of regulators for non-compliance, and more tightening measures which will enable better information sharing on suspected money laundering, fraud and other economic crimes. With criminals previously able to move from one unwitting firm to the other, improved lines of communication should shut down any attempts at deceit.

But what will changes in regulation mean for the accounting industry in the coming year?

Regulatory consolidation

There are currently 22 supervisory bodies that oversee the accountancy and legal sectors and are responsible for ensuring anti-money laundering (AML) compliance. But now the government is proposing “a significant consolidation of supervision into a single public body or a handful of professional bodies.”

This is currently one of the biggest sticking points in the industry. Already a group representing 13 accounting bodies is strongly opposed to the idea of a centralised regulator. Prior to the announcement of the Economic Crime and Corporate Transparency Act reform, the Association of Accounting Technicians felt that the potential changes “could cause enormous disruption, expose businesses to money laundering risk, and weaken AML oversight across the country”. It’s clear that there was a nervousness around the reforms before they were announced.

Their reticence is understandable in part – consolidation could lead to less specific guidance for regulated entities. That said, the fact is that money laundering supervision is currently uneven across supervisors. An analysis conducted by the FCA in 2019 revealed that supervisors, most notably the accountancy sector and many smaller professional bodies, ‘focus more on representing their members than robustly supervising standards’ and that nearly a quarter of regulators were not conducting any supervision at all.

As observed in the book Butler to the World by investigative journalist Oliver Bullough, “If you were starting from a blank piece of paper, then clearly I suspect you wouldn’t end up with what we’ve got now got”. A lack of a central overarching body and consistency is exactly how money laundering and poor AML practice can slip through the net.

So, the conversation around whether this is a positive or negative for the industry will undoubtedly continue in 2024.

Mistaken identities

What else can we expect in the coming year in the world of accountancy? It’s an unfortunate truth that we’re likely to see an increase in synthetic identity thefts. Synthetic identities – which are a combination of fabricated credentials and real credentials – are becoming increasingly accessible as more sensitive data is shared over the dark web.

But how widespread is the problem? Reuters has reported that synthetic identity fraud has overtaken credit-card fraud as the fraud that is growing the fastest globally. On top of this, research indicates that nearly 50% of organisations around the world have been victim to synthetic identity fraud over the past 12 months.

To prevent the use of synthetic identity fraud, accountants must adopt the most up to date detection procedures and technology to  prevent these identities from progressing with their purchase or transaction. That includes being ready to tackle the misuse of generative AI, which can generate fake identities, documents and conceal the source of illicit funds.

As well as being able to flag its misuse, businesses must have a secure way of sharing their findings with the relevant authorities and fellow targets to tackle the rise in deception.

The bottom line

Predicting what the future will bring is never an exact science, but it’s certain that the accounting industry is facing a year of change. By prioritising the strengthening of anti-money laundering procedures, accountants and their teams can have much needed peace of mind, and get on with what they do best.

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