The Growing Role of Tax and Auditors in Strengthening AML Compliance

Anti money laundering controls are no longer limited to banks and compliance departments alone. Today, tax professionals and auditors play a much larger role in identifying suspicious financial activity and helping businesses stay compliant. As financial crime becomes more complex, regulators are paying closer attention to how financial records, tax filings and audit reports reflect the true nature of business activity.

Tax and audit functions now sit at the center of financial transparency. Their work provides critical insight into whether money flowing through a company reflects genuine commercial activity or something more concerning.

Why Tax Records Matter in AML Monitoring

Tax filings offer a clear picture of how income is earned, reported and transferred. When tax records do not match transaction behavior, it often raises important questions. A company showing low taxable income while moving large volumes of funds is one of the most common warning signs seen during reviews.

In many international cases of financial crime, tax inconsistencies were one of the first indicators that something was wrong. According to guidance published by the Financial Action Task Force, mismatches between declared income and transaction activity are considered a key red flag when assessing money laundering risk.
Reference: FATF Risk Based Approach Guidance 2023.

This is why tax data is now widely used alongside transaction monitoring systems to help identify unusual activity much earlier.

How Auditors Support AML Efforts

Auditors review financial records to confirm accuracy, but their role now extends far beyond basic verification. They are expected to assess whether transactions reflect real economic activity and whether the business model makes financial sense.

During audits, common risk areas include sudden revenue growth without business expansion, unusually complex related party transactions and repeated losses paired with strong cash movement. These patterns may not automatically indicate wrongdoing, but they require further examination.

International financial crime reviews have shown that weak audit oversight continues to be a major factor in undetected laundering activity.
Reference: Global Financial Integrity Review 2024.

The Need for Better Coordination Between Teams

One of the most common weaknesses in AML programs is poor communication between tax, audit and compliance teams. Tax teams may identify unusual reporting patterns while auditors spot inconsistencies in financial statements. If these findings are not properly shared with compliance teams, important risk signals may be missed.

Organizations that integrate tax and audit findings into their AML frameworks are generally more effective at detecting suspicious behavior early. This coordinated approach allows risks to be reviewed from multiple angles rather than in isolation.

Technology Is Changing How Risks Are Identified

The use of data analytics and automation is growing rapidly in tax and audit work. Advanced systems can now detect abnormal transaction behavior, irregular expense trends and unusual profit movements across large volumes of data.

These tools do not replace professional judgment, but they make reviews faster and more precise. According to international research on financial crime technology, organizations using data driven audit techniques achieve stronger detection with fewer false alerts.
Reference: International Financial Crime Technology Review 2024.

Increased Responsibility for Professionals

Expectations on tax advisors and auditors are rising. They are now expected to actively identify and escalate suspicious financial behavior rather than simply record information. Poor documentation, weak risk assessment and failure to act on warning signs can expose professionals to serious regulatory and reputational consequences.

As a result, many firms are strengthening internal training, improving reporting procedures and increasing cooperation between departments.

Conclusion

Tax and audit functions are no longer operating on the sidelines of AML compliance. They are now essential pillars of financial crime prevention. By analyzing tax behavior, verifying financial reality and highlighting inconsistencies, these professionals play a vital role in protecting financial systems.

Businesses that strengthen collaboration between tax, audit and compliance teams will be better prepared to meet regulatory expectations and reduce their exposure to financial crime risks.