Money Laundering

[Kent Accountant]

Have recently attended a lecture on Money Laundering presented by a police officer working for the Serious Organised Crime Agency.

All firms in the Regulated Sector (primarily banks, solicitors, accountants, independent financial advisers, money service bureaus) have a legal liability to report to SOCA any suspicious activity where there is a suspicion of a crime and the crime has proceeds. The proceeds could be a cost saving and there is no de minimis limit. Failing to submit an Annual Return to Companies House is a criminal offence. The proceeds are the cost saving i.e. the Annual return Fee has not been paid. Tax Evasion is an offence, tax avoidance is not. Reports should be made where there is knowledge of income not declared to the Inland Revenue even if HMRC are aware of this due to an enquiry.

195,000 SARs (Suspicious Activity Reports) were filed last year. SOCA took over from NCIS in April and have put in much more sophisticated systems for using the information contained in the SARs.

He gave examples of fairly minor disclosures which were connected to other disclosures and resulted in multi million pound cases of drug trafficking and organised crime. Apparently suspicious businesses can use large amounts of electricity for hydrponic cultivation of Cannabis - so watch out for high fuel bills.

This is only a flavour of what he said, but if you have to undertake CPD and you want the speaker's details for your local group, PM me and I will let you have the contact details

SOCA's website is www.soca.gov.uk

 

[PI Guy]

Interesting. So a client's confidentiality means nothing anymore?

 

[bwglaw]

Illegal activity would not be protected under legal privilege and some solicitors have been struck-off for failing to act and/or for being part of the activity.

Jonathan

 

[PI Guy]

It's all getting very big brotherish. Funny to say that out load considering what i do for a living.

 

[Kent Accountant]

Interesting. So a client's confidentiality means nothing anymore?

We always point out our money laundering obligations to clients and gave a four page letter to all existing clients and give the same letter to all new clients confirming those obligations. In addition we are now required to positively identify all new clients by seeing for instance a passport and utility bill.

This is very much Big Brother and concerns many of us greatly. The important considerations that we have to bear in mind is that there must have been criminal intent and that there has to be real suspicion and not just speculation

 

[Ozzy]

My business is also affected, as Company Registration Agents also have to "satisfy themselves to the identity of their client". Or at least that is how it was worded last time I checked. I wonder how many of the purely online only formation websites out there now comply with this regulation?

(for the record my operational procedures and automated systems for checking have been reviewed by a couple of officers from Operation Stirling at my request and got a nice thumbs up)

 

[Kent Accountant]

Hadn't thought about that. Can't see how they can include much time spent on money laundering procedures at the rate some of the online ones charge

 

[creospace]

Latvia was sited as being in the top 5 countries for laundering of money by the US!

You have to wonder with a country of only 2.5 million that is poor and hte number of porche's and with it's own maserati dealerhsip!

 

[Ozzy]

Oh how do I word this ... I would suspect an extremely small amount of time is spent dealing this aspect of their legal obligation. I know for a fact that one organisation which charges >£20 for a company formation doesn't carry out any checks, as I've been given an inside demonstration by one of their reseller clients.


A simple way to check is to place an order using a PO Box postal address, with a hotmail email address and enter incorrect billing address information for payment. Maybe put the wrong card holders name in too. Enter a mobile phone number as the contact number, and hell forget a PO Box put Nigeria down as the delivery address. As much as you can think of as dodgey information and see if the company gets incorporated. Almost all of the cheap online formation companies will probably just push it through no questions asked.
I'm waiting for the day the big spotlight of the law focuses on my industry to see who's in for the hammer.

 

[bwglaw]

Whilst we are not regulated by The Law Society (we are not a law firm per se) we do have our own checks in place before accepting anyone as clients and we do searches of all enquirers/clients. A check we did this week revealed that the enquirer was in fact a competitor!

There are commercial benefits of putting adequate procedures in place, not only for the Money Laundering Regs

Jonathan

 

[lawspeed]

I would echo Jonathan's comments: This is not simply a question of satisfying the letter of the law. Regardless of the regulations you should as a matter of good business practice ensure that you can be certain of the identity of your customers (and suppliers) and ensure that the individual contact you are dealing with is authorised to represent/bind that customer or supplier.

 

[Paul BARCAP]

Guys,
Did you know that banks are starting to offer anti money laundering packages to accountants and bookkeepers that keep you within the Law. Barclays do it for £35 a month.