Employee screening under the Money Laundering Regulations
Accountancy firms are responsible for checking that employees whose work affects AML compliance have the competence and integrity needed for their role.
This assessment applies when the employee is appointed and continues while they carry out relevant duties.
The way responsibility is organised will depend on the practice.
A larger firm, for example, might divide screening, supervision, and senior AML responsibility among several people.
Yet, in a micro-practice, a simple process using existing recruitment and personnel records can provide sufficient evidence, provided the decision is clearly documented.
Key takeaways
- Screening applies according to the employee’s actual duties, rather than their job title or seniority.
- The assessment should reflect the level of AML responsibility and supervision attached to the role.
- Recruitment evidence can support the decision when it addresses the AML demands of the role and the candidate’s reliability.
- Criminal-record checks are only relevant if the role or another applicable requirement justifies them.
- Suitability should be reconsidered when responsibilities change or credible concerns arise.
- Records need to show the evidence considered, the decision reached, and any follow-up action.
Employees covered by AML screening
Screening must assess whether employees are competent to perform their functions effectively and demonstrate appropriate conduct and integrity.
The employee’s actual work determines whether they fall within scope. A person is relevant when their role affects compliance with the Money Laundering Regulations or helps the practice address money-laundering or terrorist-financing risk.
This commonly includes employees whose position can expose them to suspicious activity reporting and those responsible for AML oversight or escalation.
That said, seniority and job title are not determinative. For example, an office-support role might fall outside the scope but become relevant if it contributes to onboarding or otherwise handles client records.
After identifying which employees fall within the screening duty, two boundaries should be kept clear:
- A sole practitioner who neither employs nor acts in association with another person falls within the Regulation 21(6) exception.
- Separately, approval and criminal-conviction requirements for beneficial owners, officers, and managers are distinct from employee screening.
Screening before appointing someone to an AML-relevant role
Firms should define the required competence from the AML-relevant functions in the job description, taking account of the work assigned and the supervision available.
A trainee handling routine records under close review, for example, does not need the same expertise as an employee with significant AML responsibility.
In terms of evidence, this can come from the candidate’s professional background, supported where appropriate by references.
Material application claims may need verification, too. For a role involving judgement, a brief recorded assessment can show how the candidate applies their knowledge.
Induction and later training can strengthen the employee’s knowledge, but they do not replace the suitability assessment required at appointment.
Checks should be limited to information genuinely needed for the role and focused on the successful candidate whenever practicable.
The Information Commissioner’s Office supports this proportionate approach in draft recruitment guidance that remains under review.
Checking conduct, integrity, and criminal record issues
Personal-suitability checks can draw on relevant background evidence, with references used when circumstances warrant them. Declarations about conflicts, restrictions, or other professional obligations may also assist if they relate to the position.
Adverse or inconsistent information needs context, so firms should allow the candidate to explain it, then make a reasoned decision linked to the responsibilities and risks of the job.
The same proportionate approach applies to criminal-record screening because Regulation 21 does not require it for every relevant employee. A check is often justified by the role’s risk profile or by a supervisory or legal requirement.
The correct disclosure system depends on where the job is based, and standard or enhanced Disclosure and Barring Service checks are restricted to eligible positions. Knowingly requesting a higher-level check than the law allows is unlawful.
If role-specific checks are needed, the written offer can make the appointment conditional on satisfactory completion.
Reviewing AML suitability during employment
Accountancy practices need a way to reassess suitability while an employee remains in a role covered by the screening duty.
This can sit within existing employment and compliance reviews, as the Consultative Committee of Accountancy Bodies recognises that many businesses already gather useful evidence through those routes.
A reassessment might be needed when an employee takes on more AML-sensitive duties or when credible information calls their suitability into question.
Some practices use an annual declaration or screening review to keep administration manageable, but Regulation 21 sets no fixed review interval, so timing should reflect the role’s risk and any expectation set by the firm’s AML supervisor.
Crucially, repeating every recruitment check each year likely adds little value if nothing material has changed. When a reassessment is needed, the firm’s response should fit the issue raised.
A knowledge gap could be addressed through a remedial plan, supported by closer supervision or restricted duties until competence is confirmed.
Practical takeaway: An allegation affecting trustworthiness needs a different response: a fair investigation based on verified information. Training results can evidence knowledge, but the suitability decision still needs to consider the assessment as a whole.
Recording a proportionate employee screening process
A proportionate screening process should still follow a clear role-based workflow.
The practice should identify which roles can affect AML compliance and keep that record aligned with its wider firm-wide risk assessment and controls. For each covered role, the record should define the initial screening requirements and the circumstances that would prompt reassessment.
Existing personnel and compliance records can be used when, taken together, they provide enough evidence for the assessment. The dated decision record needs to identify the reviewer and explain the outcome by reference to the evidence, including any required follow-up.
In a very small practice, a role matrix and a one-page employee screening form are typically sufficient.
The record must, however, still confirm that the employee was assessed against the AML responsibilities and trust requirements of the role. A note stating only that references were obtained is unlikely to demonstrate the full assessment.
Importantly, candidates and employees should be told what checks will take place and why. Screening information must be relevant to the purpose, kept secure, and accessible only to those who need it.
Criminal-offence information and intrusive vetting material require particular care, so the firm should consider whether a clear decision record is enough instead of retaining every source document.
In summary
Employee screening gives the practice a clear basis for deciding who is suitable for AML-relevant work and whether that suitability continues over time.
The process is often straightforward when it is tailored to the role and connected to existing recruitment, supervision, and employment reviews.
A concise record should explain who made the decision, what evidence supported it, and how any concerns were addressed.
This creates an accountable process that remains workable for a small practice and responsive to changes in an employee’s responsibilities or circumstances.
FAQs
The screening requirement applies to employees whose work can influence the firm’s AML compliance or its response to financial crime risk. The firm should look at what each person actually does. For instance, an administrative employee who helps with client onboarding might need screening, while a support colleague with no relevant AML duties may not.
A sole practitioner is covered by the exception in Regulation 21(6) if they have no employees and do not work in association with another person. Once the practice employs staff or works with others, it should consider whether any individuals carry out functions that bring them within the employee-screening requirement.
Checks already used in recruitment can serve as evidence when they are designed around the AML responsibilities of the role. The evidence should establish whether the candidate has the ability and reliability needed for the work they will perform. References, relevant experience, and a short practical assessment often help, depending on the level of responsibility involved.
Employees within the screening requirement are not automatically subject to a criminal record check. The role’s level of risk and any other applicable requirement govern whether a check is justified. It must also follow a disclosure route available for that position, because eligibility is restricted for some DBS checks.
Existing legislation does not prescribe a timetable for reassessment. Instead, the employee’s responsibilities and the risks involved determine the appropriate review approach. A review can be appropriate if the role becomes more AML-sensitive or credible information casts doubt on the person’s suitability.
A suitable record should show which roles require screening and why the firm reached its conclusion. It also needs to identify the reviewer and date, and record any action the firm decided to take. A brief record is adequate if it addresses both competence and personal suitability.
References and Source Material
- HMRC, Risks common to accountancy service providers
- Money Laundering Regulations 2017
- CCAB, Anti-Money Laundering, Counter-Terrorist and Counter-Proliferation Financing Guidance for the Accountancy Sector
- ICAEW, Anti-money laundering for smaller practices
- Information Commissioner’s Office, Pre-employment vetting of candidates
- Disclosure and Barring Service, DBS check requests: guidance for employers
