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AML obligations UK accountants – Practical compliance guide

AML obligations UK accountants are a critical compliance area for every accountancy practice. Small firms, sole practitioners and limited company accountants must understand money laundering regulations and implement a proportionate, risk‑based approach to customer due diligence and reporting.

This guide explains who is covered, the core AML obligations UK accountants face in 2026/27, how supervision works, practical steps for small firms and common pitfalls to avoid.

Who is covered by the money laundering regulations?

The UK money laundering regulations apply to a wide range of businesses, including accountancy firms and independent accountants who provide certain services. Coverage depends on the services you provide rather than the business structure.

  • If you provide accountancy or auditing services that include preparing or handling accounts, paying client money, or overseeing client assets you will commonly be in scope.
  • Services that create a risk of facilitating money laundering attract obligations – for example, helping clients set up companies, providing trust or company services, or offering tax advice in particular circumstances.
  • The regulators consider both regulated activity and the way a firm operates – so even small or specialist practices can be caught by the rules.

If you are unsure whether a specific activity is in scope it is sensible to obtain professional advice or speak to your AML supervisor.

Core AML obligations UK accountants must meet

Accountancy firms supervised for AML must apply a set of core obligations designed to detect, deter and report financial crime. Below we explain the practical requirements.

Risk assessment and risk‑based approach

Every firm must carry out a risk assessment of its business and clients, and apply a risk‑based approach to controls and resource allocation.

  • Identify and document the business’s money laundering and terrorist financing risks.
  • Consider customer types, services offered, geographies, transaction volumes and delivery channels.
  • Apply enhanced measures for higher risk situations and simplified measures where appropriate and justified.

A clear, up‑to‑date risk assessment helps defend decision making and demonstrates proportional controls to a supervisor.

Customer due diligence (CDD)

Customer due diligence or CDD is at the heart of AML compliance. Firms must verify client identity and take reasonable steps to understand the nature of the client relationship.

  • Verify identity for individuals and entities before establishing a business relationship or carrying out relevant services.
  • Obtain evidence of beneficial ownership for companies and trusts where relevant.
  • For corporate customers, verify the identity of directors and persons with significant control.

Where relevant, use digital ID tools or certified documentation. Accountants should note Companies House identity verification requirements when advising on company formation – see GOV.UK guidance on verifying your identity for Companies House.

Ongoing monitoring

CDD is not a one‑off activity. Firms must monitor transactions and client relationships for suspicious or unusual activity.

  • Keep client information up to date and review it periodically based on risk level.
  • Monitor transaction patterns and query any activity inconsistent with the client profile.
  • Reassess the risk rating if new information emerges.

Ongoing monitoring helps detect laundering techniques such as layering and unusual fund flows.

Record keeping

Robust record keeping is a legal requirement. Firms must retain CDD documents and records of transactions for a specified period.

  • Retain identity verification documentation and CDD evidence for the legally required period, and longer if your risk assessment requires it.
  • Keep records of internal risk assessments, policies, client risk ratings and decisions to apply simplified or enhanced due diligence.

Good records are essential for supervisory visits and in responding to regulatory queries or investigations.

Politically exposed persons (PEPs)

PEPs present higher risk because of access to public office and influence.

  • Identify PEPs and apply enhanced scrutiny, including source of funds and enhanced ongoing monitoring.
  • Consider both domestic and foreign PEPs, and family members or close associates.

Suspicious activity reporting (SARs)

Firms must report suspicions of money laundering or terrorist financing to the appropriate authority without tipping off the client.

  • Use the National Crime Agency (NCA) reporting process where a suspicious transaction or activity is identified.
  • Before making a disclosure consider whether a defence to tipping off applies and whether to seek a consent notice from NCA.

Timely and accurate SARs protect the firm and contribute to national efforts to counter financial crime.

Internal controls, policies and training

Firms must have written AML policies and appoint a nominated officer or MLRO (money laundering reporting officer).

  • Maintain a documented AML policy, risk assessment and procedures tailored to your firm’s size and risk profile.
  • Appoint an MLRO with sufficient seniority and authority to receive reports and make SARs.
  • Deliver regular AML training for all staff, updated for legislative and supervisory changes.

Policies and training should be practical and focused on real scenarios your staff will face.

AML supervision – who supervises accountants?

Accountancy firms that are subject to the money laundering regulations are supervised by designated AML supervisors. Supervision can be carried out by HMRC or by a prescribed professional body, depending on how the firm is regulated.

  • Many accountants are supervised by professional bodies such as ICAEW, ACCA or AAT, which set supervisory standards and carry out reviews.
  • HMRC supervises unregulated accounting businesses for AML purposes and publishes supervisory guidance and reports.
  • Check with your regulator or professional body to confirm who supervises your firm and what reporting obligations you have.

The UK government is continuing to reform AML supervision and has consulted on changes to the supervisory model – see the consultation on reforming anti‑money laundering and counter‑terrorism financing supervision.

Registration, fees and wider economic crime obligations

Many firms must register with their AML supervisor before carrying out relevant activities. Supervisors may charge fees to fund supervision, and the government has introduced measures to fund anti‑money laundering activities across sectors.

  • The Economic Crime (Anti‑Money Laundering) Levy is a government measure that affects some businesses; see the Treasury’s guidance on the Economic Crime (Anti‑Money Laundering) Levy.
  • Supervisory fees, registration processes and periodic reporting requirements vary by supervisor.

Ensure your firm is registered if required and budget for any supervisory fees or levy liabilities.

Practical steps for small accountancy firms

Small practices can implement sensible, proportionate AML controls without excessive cost. Focus on practical, risk‑based measures.

  • Conduct a simple, documented risk assessment and review it annually or when services change.
  • Create or adopt a short AML policy that describes CDD, PEP checks, SARs procedures and record keeping.
  • Appoint an MLRO and ensure staff know who to report to and how to escalate concerns.
  • Use reliable ID verification tools and maintain a secure central record of client documents.
  • Train staff with short, focused sessions and scenario‑based examples relevant to your work.
  • Consider outsourcing higher‑risk CDD checks or using third‑party identity verification providers when appropriate.

These measures reduce operational burden and help demonstrate compliance to your AML supervisor.

Technology, outsourcing and third‑party checks

Technology can make CDD and ongoing monitoring more efficient, but firms must still take responsibility for their controls.

  • Digital ID verification tools help verify identity documents and check watchlists, but validate provider reliability and audit trails.
  • Transaction monitoring systems can flag unusual patterns, though small firms may use manual thresholds and periodic reviews instead.
  • If you outsource AML processes to a third party, document arrangements and carry out due diligence on the provider.

Always ensure outsourced functions are covered by contract and oversight, and that the firm can produce required records to supervisors.

Common pitfalls and enforcement risks

Failing to meet AML obligations can result in enforcement action, fines and reputational damage.

  • Inadequate CDD or poor record keeping is a frequent issue cited by supervisors.
  • Lack of senior ownership or an ineffective MLRO arrangement undermines reporting and governance.
  • Delayed SARs or tipping off a client can have serious legal consequences.

Supervisors publish reports and findings – for historical context see the government’s Anti‑money laundering and counter terrorist finance supervision reports.

Example checklist — what to check this month

  • Confirm whether your firm is in scope and registered with the correct supervisor.
  • Update your risk assessment to reflect any new service lines or client sectors.
  • Verify identity for new clients and review high‑risk client files for enhanced CDD.
  • Run a short staff training session on spotting suspicious signs and SAR procedure.
  • Test record retention by sampling five client files and confirming documentation is in place.

Repeat these checks quarterly and document actions taken.

AML obligations and corporate transparency

Recent UK reforms increasing corporate transparency have implications for accountants who advise on company formations and ownership.

  • Verify ultimate beneficial ownership and take care when assisting clients to incorporate or manage companies.
  • Use Companies House guidance on identity verification when advising on company registration – see Verifying your identity for Companies House.

Greater transparency means accountants must be more diligent in validating client structures and ownership.

When to seek specialist advice

Some circumstances require detailed legal or forensic support. Seek specialist advice if:

  • You identify complex ownership structures or potential fraud.
  • A client asks you to accept cash or unusual payment methods that are high risk.
  • You are unsure whether activity is a suspicious transaction and whether to submit a SAR.

An experienced AML consultant or solicitor can help navigate tricky cases and liaise with supervisors.

UK tax and legal accuracy

This article is for informational purposes only and does not constitute professional tax or financial advice. Please speak to a qualified accountant before taking action. This article refers to the tax year 2026/27 and the legal framework in force at the time of publication.

Frequently asked questions

What are the main AML obligations UK accountants must follow?

  • The main obligations are conducting risk assessments, performing customer due diligence, ongoing monitoring, record keeping, training staff, and reporting suspicious activity. Firms must also appoint an MLRO and register with the appropriate AML supervisor where required.

Who supervises accountants for AML compliance?

  • Supervision is carried out by HMRC for some firms and by prescribed professional bodies for others. Check your regulator or professional body to confirm who supervises your practice.

How do I perform customer due diligence for a corporate client?

  • Verify the company’s identity, confirm incorporation details, identify and verify directors and persons with significant control, and obtain evidence of beneficial ownership. Use reliable documents or digital ID tools and record the checks you have done.

What should I do if I suspect money laundering?

  • Do not tip off the client. Report your suspicion to the National Crime Agency through a SAR and follow your firm’s internal reporting procedures. If you are unsure, seek legal advice from an AML specialist.

Can small firms use simplified due diligence?

  • Simplified due diligence may apply in low‑risk situations but must be justified and documented. Most firms will adopt a proportionate approach based on their risk assessment.

Summary and next steps

AML obligations UK accountants face are practical and manageable when approached on a risk‑based, documented basis. Prioritise a clear risk assessment, reliable CDD, good record keeping and staff training. Keep records, appoint an MLRO and make timely SARs where necessary.

If you would like tailored support to assess your firm’s AML controls or to implement a practical compliance framework, Figures can help. We offer services ranging from policy and risk assessment preparation to ongoing compliance support and training. Learn more about our services for accountants and firms: Statutory Accounts & Tax, Bookkeeping & Xero. To discuss how we can help, book a discovery call.

External references and further reading

For tailored help or a compliance review contact Figures and book a discovery call.