Criminal record checks: BOOMs
Under the Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) the IFA must approve all beneficial owners, officers and managers (BOOMs) in our supervised firms.
The approval process seeks to ensure that no BOOM has been convicted of a relevant offence as set out in Schedule 3 to the MLR 2017. Amendments in the Money Laundering Regulations 2019 (MLR 2019) clarifies that individuals seeking BOOM approval from supervisory bodies such as the IFA must provide information which enables the IFA to determine whether the applicant has been convicted of a relevant offence.
Individuals who have an unspent relevant criminal conviction set out in Schedule 3 to the MLR 2017 cannot be approved by the IFA as member engaged in public practice. There is no right of appeal under the MLR 2017 and MLR 2019, although a person can re-apply once the conviction becomes spent.
The relevant convictions in Schedule 3 to the MLR 2017 are economic crimes such as fraud, bribery, dishonesty, tax offences and breaches of the money laundering regulations. Driving offences are not included in the list. Nonetheless, IFA members and affiliates should be aware that some convictions that are not included within Schedule 3 may still lead to disciplinary action.
Further guidance on the definition of BOOM.
What do you need to do?
Firms, including sole practitioners, must take reasonable care to ensure that no-one is appointed, or continues to act, as a BOOM without IFA approval. If a person’s approval is withdrawn, firms must ensure that the person ceases to act in any relevant role.
In order to be approved, the IFA must obtain evidence of a Disclosure and Barring Service (DBS) check to get a copy of your criminal record. This is called ‘basic disclosure’ check. The check will only show criminal convictions that are not ‘spent’.
For the basic disclosure checks, firms and sole practitioners should use the following disclosure services:
- Disclosure and Barring Service in England and Wales;
- Access NI in Northern Ireland; and
- Disclosure Scotland in Scotland.
The disclosure service chosen will be dependent on where BOOMs live and work.
The IFA also has an arrangement with Gentium UK which can also support you with disclosure checks though you are of course free to make your own arrangements.
Any person who is a BOOM with relevant unspent convictions will be committing a criminal offence with the potential of up to two years in prison and/or a financial penalty.
A relevant offence is a criminal offence that is set out in Schedule 3 to the MLR 2017.
All IFA supervised firms which registered for AML supervision with the IFA after 26 June 2018 will have provided DBS certificates as part of the registration process and will not be required to provide DBS certificates during any subsequent AML review. As part of our supervisory visits, IFA reviewers will be reviewing declared BOOMs asking for evidence that all BOOMs in our supervised firm have had a DBS check and that none of them have a relevant unspent Schedule 3 criminal conviction.
What if someone takes up a new position in my firm as a BOOM?
The Money Laundering Regulations 2017 require that you inform the IFA of any changes to BOOMs in the firm by contacting [email protected], please including the firm name and number in your email.
Any person who is a BOOM after 26 June 2018 without the IFA’s approval (i.e. BOOM with relevant unspent convictions) will be committing a criminal offence with the potential of up to two years in prison and/or a financial penalty.
What if a BOOM in my firm has a relevant unspent criminal conviction?
In accordance with the Money Laundering Regulations, firms and sole practitioners must inform the IFA if a BOOM has a relevant unspent criminal conviction as set out in Schedule 3 to the MLR 2017 within 30 days of the date on which the firm and sole practitioner becomes aware of the BOOM’s conviction by emailing [email protected]. Failure to report may lead to disciplinary action.
In such cases, the BOOM will no longer be approved by the IFA (or any other supervisor) as being a fit and proper person to be engaged in public practice.
What about the IFA disciplinary process?
The IFA takes its responsibilities seriously, particularly to ensure that professional accountancy firms are not exploited by criminals wishing to launder their proceeds of crime. Criminal convictions are a risk indicator, raising concerns that the person may not be a fit and proper person to enter the profession.
Therefore, members and affiliates who have unspent Schedule 3 criminal convictions will be automatically referred to the IFA’s disciplinary process. Furthermore, failure to seek approval for BOOMS or failure to report relevant unspent Schedule 3 criminal convictions for BOOMs of IFA supervised firms may lead to disciplinary action.