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The value of Money Laundering in the UK is estimated to be £90billion. As a result, the UK Government established the Joint Money Laundering Intelligence Taskforce in 2015. Here are the procedures to be aware of when operating your business.
What is Money Laundering?
Money Laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities. If undertaken successfully, it allows them to maintain control over those proceeds and, ultimately to provide a legitimate cover for their sources of income. Examples could include exploitative and violent crimes, including large scale drug dealing and people trafficking.
Why is money laundering relevant to us as your professional advisers?
By setting up a UK company for someone we could be providing legitimate cover. In addition, we are not just talking about the proceeds of gun-running, drug-trafficking or terrorism it’s the proceeds of any criminal activity. Defrauding the Revenue (or tax authorities in any jurisdiction) is a criminal activity so a client who comes to us for UK tax advice may pay us with the proceeds of his business, which has been evading tax in another jurisdiction, and this would constitute a Money Laundering offence.
What are our responsibilities?
Before accepting instructions from a new client, we must be satisfied that you are not involved in any activity which is Money Laundering and that we will not be drawn into assisting you with Money Laundering. To protect ourselves we are required to put in place procedures to enable us to be satisfied in this respect.
The procedures include:
- Before acting for a new client, we must obtain and retain satisfactory evidence of the new client’s identity. Where there is more than one person involved, we also must take reasonable measures to obtain evidence of that other person’s identity;
- We must maintain records of all transactions we undertake on your behalf;
- All new staff we employ, must be educated and trained on their responsibilities regarding the Money Laundering regulations, and existing staff must be provided with updates and regular refresher courses; and
- We must also have in place an internal reporting procedure for any suspicions of Money Laundering.
What are the consequences of being involved in Money Laundering activities?
Under the legislation it is a criminal offence to:
- Conceal, disguise, convert or transfer another’s proceeds of criminal conduct – max penalty 14 years imprisonment and/or a fine.
- Assist another to retain the benefit of criminal conduct – max penalty 14 years imprisonment and/or a fine.
- Acquire, possess or use the proceeds of criminal conduct – max penalty 14 years imprisonment and/or a fine.
- To tip off in respect of a report of, or investigation into suspected Money Laundering – max penalty 5 years imprisonment and/or a fine.
- In the case of drug trafficking and terrorism, to fail to report knowledge or suspicion of Money Laundering where that knowledge was acquired in the course of a trade, profession, business or employment – max penalty 5 years imprisonment and/or a fine
Money Laundering Reporting procedure
Any suspicions must be reported to The Serious Organised Crime Agency (SOCA). They have the power to inform HMRC. A record should be maintained of the date and nature of any reports to the police. Reporting a suspicion of Money Laundering to the police does not breach any professional duty of confidentiality to the client and cannot be overridden by commercial contract.
Contact us today
If you have concerns or are uncomfortable with any of your business dealings, or have any other questions relating to this, contact Black and White Chartered Certified Accountants today, or call us on 0800 140 4644.
