The Institute of Chartered Accountants in England and Wales (ICAEW) has published its AML Supervision Report 2024/25: Examining Non-Compliance, which provides an account of its AML supervisory activities over the 9,500 firms it supervises.
Headlines
During the period covered by the report (the year-ended 5 April 2025), the ICAEW carried out 1,185 AML monitoring reviews. Of the firms reviewed, 19.4% were found to be compliant (13.9% in the previous year); 60.6% were found to be generally compliant (66.8% in the previous year); and 20.0% were found to be non-compliant (19.3% in the previous year).
In the current year, a significant increase in fines from £92,025 to £197,706 was noted, with these ranging from £240 to £31,700 per fine.
The reviews also considered the quality of suspicious activity reports submitted by firms. SARs were reviewed at 254 firms and 5.9% (15) were found to be of poor quality.
Key findings
As in previous years and consistent with reviews carried out by Mercia, the most common failings relate to customer due diligence (CDD). They include:
- Identifying the client – 11.9% of all firms reviewed were found to have ineffective client identification procedures. In some cases, firms had failed to properly identify the beneficial owners, and in other cases, firms had failed to understand the nature of the client’s business and the jurisdictions it operated in.
- Assessing the risk – Ineffective risk assessment documentation was found at 12.6% of all firms reviewed. This was mostly firms failing to document all risks identified.
- Verification – Ineffective verification procedures were found at 10.2% of all firms reviewed. Mostly the firms who were non-compliant had failed to gather sufficient evidence to manage or mitigate the risks identified. With some cases, it was found that firms had merely performed additional ID verification on a beneficial owner, when the money laundering risk related to transactions in high-risk third countries.
- Ongoing monitoring – 11.6% of all firms reviewed were not performing and updating their CDD throughout the duration of the client relationship. Some firms in this category will have updated CDD on some clients but not all, and some will have considered whether there are changes, but not recorded the review.
Other common findings were:
- Some firms did not have adequate procedures in place to identify and report material discrepancies between information they have gathered and the information their clients had provided on the Persons of Significant Control (PSC) Register.
- Some firms had not performed regular reviews of the adequacy and effectiveness of their policies, controls and procedures (compliance reviews).
- Some firms had not performed an adequate firm-wide risk assessment.
With an increase in the fines issued by the ICAEW and a change to the supervisory body to the Financial Conduct Authority (FCA) in the near future, firms need to focus on AML as a key area in the coming year.
Mercia’s MLRO Support Service includes a range of products and services to enable MLROs to comply with the money laundering regime, including access to our Money Laundering Compliance Manual; access to firm-wide AML training; access to our technical query helpline for AML queries; and a monthly anti-money laundering newsletter.
We’re also on hand to conduct AML compliance reviews.
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