In both individual coaching sessions and at a recent meeting of one of the groups of firms I facilitate, this topic came up and there was some uncertainty about what is expected of accountants. I struggled to find information on this that was practical for accountants but thanks to Mark Doorly, CAANZ Account Manager for Practice in QLD, I’m sharing some information and links with you.
It appears to me that if you are a certain type of entity (including a financial planner) there are obligations under anti money laundering and counter terrorism legislation. This is overseen by AUSTRAC and you can see more here: Customer identification and verification | AUSTRAC
It also appears to me that accounting firms that are not delivering financial planning services are not caught by this. If you are reading this differently please let me know.
What is clear however is that the ATO and the Tax Practitioners Board have released guidance on what is expected of tax practitioners – which is pretty much every accounting firm in the country.
Here is the link to the CAANZ notes on this: ATO and TPB publish final client verification guidance | CA ANZ (charteredaccountantsanz.com)
Here is the link to the ATO guidelines: Strengthening client verification guidelines | Australian Taxation Office (ato.gov.au)
Here is the link to the TPB guidance: TPB Practice Note TPB(PN) 5/2022 Proof of identity requirements for client verification | TPB
Here are some notes from CAANZ to help:
When do these new requirements apply?
The new proof of identity (POI) requirements will become mandatory in the latter half of 2022 (the TPB and ATO will confirm the start date in due course). However, both agencies recommend that tax practitioners start adopting these guidelines in their practices now.
The TPB flagged that: “If you fail to properly verify a new or ongoing client’s and/or their representative’s identity, you may breach an ongoing registration requirement, the Code of Professional Conduct (in particular, Code items 1, 7 and 9) or the civil penalty provisions in the Tax Agent Services Act 2009.”
ATO and TPB guidelines – a comparison
The ATO and TPB collaborated on this project and their guidelines are closely aligned (e.g. on the types of identity verification documents to use, how to deal with situations where clients do not have standard identity documents and record keeping)..
While the ATO’s guidelines are primarily for tax and BAS agents who use the ATO’s online services, the TPB’s guidelines apply to all tax practitioners regardless of whether they use the ATO’s online services or not.
Tax and BAS agents using the ATO’s online services and following the ATO’s guidelines will also meet the TPB’s requirements.
Do the POI requirements apply only to individual clients?
No. POI also applies to those representing clients and also requires the sighting of legal documents demonstrating the authority of an individual to engage the tax practitioner on behalf of a non-individual client.
Does an existing client’s identity need to be verified?
Although the guidelines relate mainly to the on-boarding of new clients, professional judgment should be used to determine whether a POI process is necessary for a well-established client (the TPB guidance says it “requires that the registered tax practitioner retains a record of their assessment about the appropriateness of undertaking the [POI] steps“.
CAANZ ran a webinar on this which you can watch here: Sharing Knowledge: Your Practice | CA ANZ (charteredaccountantsanz.com)
In short, accountants are going to have confirm the identity of every new client before doing work for that client, so there is a change needed to your client qualification and engagement processes.