Anti-Money Laundering Guidance

The UK’s anti-money laundering legislation is designed to prevent the proceeds of crime entering the legitimate financial system. The regulated sectors covered by the legislation (e.g. banks, lawyers and accountants) represent areas where such entry could take place, making members of these sectors the ‘gatekeepers’.

Criminals, corrupt politicians and sanctioned individuals may attempt to hide their ill-gotten gains by purchasing assets. It comes as no surprise that such individuals might own land, houses or expensive yachts.

But these groups might also have children. Children that require an education.

It is only relatively recently that Government has recognised the money laundering risk posed by private schools. Furthermore it is no secret that some educational establishments have been used as vehicles for student VISA fraud.

Educational establishments do not appear in the list of regulated sectors for AML purposes, nor have they historically appeared high on the list of risky sectors, but that does not mean that they do not pose a risk.

The guidance requires all firms to carry out a risk assessment on their clients and this is no less important when doing work for an educational establishment. This risk based approach must reflect the purpose, regularity and duration of the business relationship, as well as the business’s own firm wide risk assessment. This might include establishing what controls your client has in place to help spot ‘dirty’ tuition fees, and their student demographic.

Former security minister Ben Wallace urged heads to do the ‘google test’ on proposed students or their parents. Whilst you are not required to carry out due diligence on the customers of your clients, this may however be an option.

Many schools already have an AML policy in place. This is something to check.

Ultimately the robustness of your potential clients systems in this area may have an impact on your overall client risk assessment. Remember that should you suspect your client of being in receipt of the proceeds of crime you will need to consider your legal obligations to file a suspicious activity report (SAR) with the National Crime Agency (NCA).

Further guidance on risk assessment is available in the Anti-Money Laundering Guidance for the Accountancy Sector published by CCAB, and in ICAEW risk guidance.