ICAS BOOM Thematic Review

While the government has recently announced that AML supervision will move to the FCA in the future, we remain the AML supervisor for ICAS firms until these changes take effect. We continue to devote significant resources to conducting risk-based AML supervision of accountancy firms and TCSP providers.

As notified to all ICAS AML supervised  firms, ICAS introduced a new regulatory actions guidance effective from 7 April 2025, which takes regulatory action, including regulatory penalties, where AML non-compliance is identified.  One of the most common issues that can result in a regulatory penalty is where a firm fails to obtain approval for all the Beneficial Owners, Officers and Managers (known as ‘BOOMs’) in the firm. This is viewed by the Authorisation Committee as a serious breach as it may constitute a criminal offence under the Money Laundering Regulations. Given the repercussions of getting this wrong, ICAS conducted a thematic review of a sample of firms to identify the extent of BOOM issues and what firms can do to avoid those pitfalls.

Background

Regulation 26 of the Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘MLR 2017’) requires individuals with certain roles in supervised firms to be approved by the relevant provisional body supervisor. These individuals are beneficial owners, officers and managers, collectively referred to as BOOMs.  

ICAS AML Regulation 4.4 also requires each supervised firm to notify ICAS of any changes to the firm’s BOOMs.

While not a definitive list, the following would normally require approval:

• Principals in the firm.
• A shareholder holding more than 25% of the shares or voting rights and/or exercising ultimate control.
• The MLRO as well as any other individual who is responsible for setting, approving or ensuring the firm’s compliance with the firm’s AML policies and procedures.  
• The company secretary where the firm is a limited company. 

Unlike some of our other licensing processes, ICAS has minimal discretion over whether a BOOM should be approved. Our role is generally limited to ensuring that such individuals haven’t been convicted of a relevant offence (Schedule 3 to the MLR 2017) which would otherwise prevent them from holding the role in the firm.  

Our findings

Of the 81 firms sampled during the thematic review, 12 firms were found to have unapproved BOOMs:

• 7 firms with an unapproved director.
• 3 firms with an unapproved company secretary.
• 1 firm with an unapproved director & an unapproved company secretary.
• 1 firm with an unapproved non-principal MLRO.

The 12 firms referred to were of various sizes, meaning that approval failures were not restricted to our smaller supervised firms. They were informed of the discrepancies and expected to remediate the issues.

Given all firms are asked to confirm that the completeness and accuracy of the list of approved BOOMs as part of their AML Declaration it is clear that these firms had not been sufficiently diligent in checking over the information and had not updated ICAS as required. In addition to failing to meet the Regulation 26 requirements, which is a criminal offence, errors in the AML Declaration  or failing to notify ICAS promptly of changes in the firm are also viewed seriously by the Authorisation Committee.

Key messages to supervised firms

Firms are reminded of the serious implications of getting this wrong. Firms are advised to:

1. Read over the ICAS BOOM article: We published an article on BOOMs on ICAS’ website: ‘Treatment of beneficial owners, officers and managers (BOOMs) in ICAS firms’ which was also highlighted in our ‘Regulation News’ update. 
2. Check over the BOOM information in your annual AML Declaration carefully and read over the accompanying guidance carefully: The AML Declaration Guidance can be viewed here.
3. Notify ICAS before any changes to BOOMs occur: The application for new BOOMs is called ‘The Approved Person Application Form’ and can be accessed here.