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.
Why is it relevant to us as your professional advisers? What more legitimate cover could be had for the
proceeds of crime than laundering it through an accountancy firm or legal
firm?
By setting up a UK company for someone we could be providing a legitimate
cover.
In addition we’re 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 you as 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 are:
Before acting for a new client we must obtain and
retain satisfactory evidence of the new client’s identity. Where the
new client is or may be acting on behalf of another person we must
take reasonable measures to obtain evidence of that other person’s
identity. (See here
for what constitutes satisfactory evidence).
We must maintain records of all transactions we
undertake on your behalf.
All new staff must be educated and trained on their
responsibilities with regard to the Money Laundering regulations,
and existing staff must be provided with updates and refresher courses.
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
We hope that you can see why we have to take these matters
seriously
Reporting procedure Any suspicions should be reported the police.
They have the power to inform the Inland Revenue A record should be maintained
of the date and nature of any reports to the police.
Satisfactory evidence of client’s identity We need to identify you and confirm that the
your address is a legitimate address.
Identity - we need to see the original of some kind
of formal photocard identification, ideally a passport or drivers licence.
- if the form of identification expires then we must
reevidence with the new identity document
Address - a recent utility bill (within the last three
months) showing the address is suitable for evidencing the address
- a certified copy should be maintained on the permanent
file.
Further clarification 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.
The legislation does not preclude
us from advising you on negotiations with the tax authorities in cases
even if you have evaded tax, provided that full disclosure of the evasion
is made to the authorities. We have considerable experience in advising
clients who decide that they need to make a “confession” to the Inland
Revenue. Nothing in this legislation prevents us offering this as a service.
However we are unable to offer advice on your specific circumstances unless
you give us authority to notify the Inland Revenue once we have completed
our report.
In our free introductory meeting
we are happy to discuss, in general terms, the tax rules on evasion and
the attitude of the authorities to a full disclosure but not your particular
circumstances. At the end of this half hour discussion we will ask you
whether you wish to appoint us as your tax advisors. Only if you agree,
sign our Client Service Agreement and go through the identification process
can we begin to act for you. From this time on we will be bound by the
rules for Money Laundering.
