ICAEW accountants: take action now!
From 1 April 2019, criminal conduct by ICAEW members will be dealt with according to the new version of the Guidance on Sanctions, which simplifies, as well as amplifies, the 2018 version. Further changes will follow in July 2019, with the introduction of new guidance for Anti-Money Laundering breaches where the relevant conduct has not resulted in a criminal conviction.
The new guidance is binding on all the Committees of the ICAEW when considering complaints against ICAEW members, students, affiliates and member/regulated/contracted firms. It is an important reference document for those regulated by the ICAEW, helping them to understand the sanctions that may be imposed by the regulator should they come into contact with the criminal justice system.
The Guidance has introduced three key changes which:
In the previous iteration of the Sanctions Guidance (2018), criminal conduct was divided into four strata, meant to represent the differing levels of seriousness of offending, with each having a different sanction entry point, namely:
This earlier guidance, addressed only those offences involving dishonesty, breach of trust and money laundering; it did not capture the full range of potential criminal potential conduct.
In the Guidance, criminal conduct is separated out by reference to the outcome for the practitioner (rather than the type of offence committed):
The aggravation and mitigation commentary in the Guidance has been substantially simplified, with committees now being told that “[f]actors that may influence the starting point (sanction) should be arrived at by considering the sentencing remarks”. This approach replaces the previous finite list of factors that committees were required to have regard to (such as any admission or denial of guilt, whether the member had cooperated with the prosecution authorities etc.). Practitioners might find that points in mitigation not raised (or taken up by the sentencing court) in the criminal proceedings cannot be so readily relied upon in the disciplinary proceedings that follow.
A further change introduced is an increase of the financial penalty for a complaint type ‘f’ in the ‘Other Regulatory and Compliance Issues’ chapter of the Guidance. Complaint type ‘f’ provides for ‘inaccurate annual return submitted to ICAEW (significant error)’. Whereas previously, a complaint of this nature was subject to a reprimand, a category F financial penalty and/or order for remedial training, the revised type ‘f’ complaint is now a category E financial penalty, meaning an increase in fine from £1,000 to £3,000.
Practitioners may already be aware of the Fixed Penalty Regime that enables the ICAEW to deal with low-level criminal conduct by way of fixed penalty, without the need for lengthy disciplinary proceedings. This regime already captures conduct such as not having a practising certificate and the misuse of the description ‘Chartered Accountants’. The new additions to this regime will tessellate with the changes to the criminal offences in the Guidance by bringing within its ambit:
The fixed penalty scheme continues to apply to minor complaints which the ICAEW Regulatory Board determines suitable for the process and where the respondent firm or individual agrees to the proposed penalty.
No huge changes here but subtle differences that may make a big difference to those Practitioners, students, affiliates and firms that find themselves on the wrong side of the criminal justice system.
In addition to the changes above, on 1 July 2019, the ICAEW will introduce a new chapter in the Guidance to deal with anti-money laundering (‘AML’) sanctions. These changes may well be part of the renewed focus on AML that is occurring across the regulated sector, in response to the setting up of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
The new chapter on AML (Chapter 19) is intended to provide for money laundering failures which have not attracted criminal censure and are therefore not captured by Chapter 4 (which provides for Criminal Offences and Police Cautions).
The new guidance captures all AML failures by firms and individuals and provides guidance as to the relative seriousness of the various types of failures; it deals separately with ‘Failures by a Firm’ and ‘Failures by Individuals’ and tailors the complaint-types to those groupings.
The guidance for firms divides AML failures as follows:
Financial penalties for firms include as a starting point, a fine of £2,000-£3,000 per principal with a capped fine of £150,000 for firms with a turnover of more than £100 million for complete failure conduct (lower caps apply to firms with a lower turnover).
For individuals, there are five separate complaint categories as follows:
The ICAEW will take all AML breaches seriously and individuals are ultimately liable to exclusion the most serious breaches.
Firms and individuals can and should take steps to ensure they are compliant with AML legislation and regulations by ensuring:
Julie Norris is a Partner in the Regulatory department and specialises in advising in the health, professional services, legal and financial fields. She advises professionals, businesses and regulators on regulatory compliance, investigations, adjudication, enforcement and prosecutions.
Sophie Bolzonello is a Associate (Australian Qualified) in the Regulatory department and specialises in advising regulated professionals on compliance, in investigations and in respect of enforcement action. She also advises regulators on policy, governance, prosecutions and litigation.
Senior Associate (Australian Qualified)
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