Accountants need to keep up their guard when taking on new clients and make sure anti-fraud checks are rigorous enough to combat a potential increase in criminal activity driven by the global pandemic.
Only 49% of respondents ran any form of online checks on new clients – preferring to verify passport and other identity details using traditional paper methods. The report showed that 65% still relied on manual record-keeping of physical documents.
The report discovered that sole trader accountancy businesses in particular regarded anti-fraud checks as ‘box-ticking’ exercises. They preferred to go with their instinct to judge new clients’ good character and rely on recommendations from other clients and contacts.
Jason Piper, head of the taxation at ACCA and author of the report Know Your Customer: Is it time to digitalise the first line of defense? surveyed professional accountants from around the world for the concise report to share global insights and help finance professionals mitigate the risks of non-compliance
The author also drew on a recent study by CCAB (the Consultative Committee of Accountancy Bodies), which found that the majority of accountants did not believe the required economic checks were proportionate to the risk of fraud.
The study explained that smaller practices relied heavily on their perceptions and personal recommendations, but added: ‘Perhaps the most significant risk comes from the over-confident accountant who assumes themselves to be capable of assessments which are not realistically within their ability.’
The survey concludes that some accountants could derive real benefits from online anti-fraud tools and that software producers and regulators must work together to ensure the technology is affordable and globally available.