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Would this be considered Money Laundering?

I work as an accountant for a UK company. Directors have requested payments to an off shore bank account & company. An invoice has been produced, and this has been properly authorised following company internal control procedures. No checks can be made of the off shore company other than Google it. However, the question I would like to ask is should I accept the Director's instructions and deal with the invoice/payment in the usual way (so that I am not accused of insubordination) or challenge the Director regarding this invoice/payment. I am of the opinion that ultimately it is the Director's responsibility to pass/authorise this off. Any views?

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Cover your own back

When you say accountant, do you mean as an employee?

You say that the payments have been authorised 'following company internal control procedures' but then go on to say 'no checks can be made of the off shore company'.

It sounds like the IC's aren't very robust, in which case I think you should raise your concerns, in writing (e-mail probably easiest) and keep a copy of this and any reply.

It might be nothing, then again it could be a whole can of worms.

 

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Answer to Kent Accountant - Yes as an employee and thank you for your advice. I always try to do everything in writing!

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Money Laundering ???

I read this post (and the title) with astonishment.

The definition of ML (as was originally intended) was to "catch" terrorist & drugs money.  OK it has since been widened in the UK to cover "proceeds of crime".  In other words, first there must be a crime and then, possibly, ML can be tacked on.

Where is the crime here?

If the invoice is disproportionate or not adequately justified, no doubt the auditor (if a largish company) or external accountant will query it, or indeed the Revenue will disallow it. … In which case tax will effectively be paid on the invoice amount (therefore no problem, and certainly no ML)

If the company is relatively small and the responsible director has passed the Invoice for payment, one can only assume he knows exactly what it is for – and the risk (if any) is his.  IC’s are more generally there to prevent more junior staff putting through “invented” bills (as so often happens in Local Government), not I suggest to "catch out" directors.

It wouldn’t surprise me to learn that the invoice was for “consultancy” or “marketing” services … and so what?  Maybe the provider of the service lives in Spain, or France etc and doesn’t want to declare it there.  With respect, is this really your business?  I think you cannot expect to keep your employment for long if you start suggesting or implying “ML” just because you couldn’t do a company search.  If it really worries you, then I suggest you get the director concerned to write “approved for payment” with his signature.  Remember, it is the director, not you, who signs the accounts.

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I think part of this is down to the lack of platforms at Manches

If I recall correctly everyone now has a duty to inform the auditors of a company of any issues even if the auditors fail to ask the correct question.

If the company is too small to have auditors then I would consider it was your duty to inform at least some of the share holders if they are in-dependant of the director, hopefully there is a no exec chairman of the board that you can talk to informally about your concerns.

If the directors that know about this are the only share holders and the company is too small to have auditors, then it is their problem not yours, just make sure you have a paper trail that connects them to the approval.   You may wish to keep copies of the emails at home encase you every need them to defend yourself.

I don’t think the fact that a payment is to a off shore bank account is enough in itself to have grounds to report money laundering, and you have to accept that the directors have a right to run the company without justifying their actions to you.   But you have a duty to inform the correct people of the issues you have so they can decide if they think it is a problem.

 

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Where's the crime?

Just because we're not aware of any crime, doesn't mean we shouldn't ask such questions on transactions that are out of the ordinary.

I'm on the original poster's side, as I'm vaguely aware of dire punishments if accountants don't report suspicious transactions, but there's no real guidance on what is suspicious!

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What is the company's money laundering policy?

If the company has a money laundering reporting officer (MLRO), an employee should simply report the matter and let the MLRO decide what to do about it.  If the accountant is not an employee, he could report the matter to his own firm's MLRO.  The penalties for not reporting suspicious activity can be quite severe, but it is the employer's duty to ensure that employees have money laundering training.

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Missing the point re ML

Money laundering is generally accepted to refer to the process of concealing the source of illegally obtained money.

It is the approval/payment of an invoice from (presumably lawful) earnings of a "normal" UK company which has given rise to this post and subsequent responses.  

I therefore ask again, what is the presumed predicate crime (without which an ML accusation CANNOT exist) ... The source (of the funds) is not hidden (being those belonging to the UK company) ... Therefore, where is the (potential) ML?

Clearly POCA has created a climate of fear and, if this forum post is representative, I would suggest that 1984 has already come to pass in the UK!  Perhaps those thinking of "shopping" their employers and/or clients should actually read the legislation and apply some common sense before even thinking of making a "suspicious transaction report" or similar.  If you don't like how the employer/client operates, don't work for/act for him - but don't act as an unpaid government spy  except in the most obvious or exceptional circumstances.  In this example, the definition of ML is not satisfied at any level. 

Simply, no crime = no ML.

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@Hansa

Hansa wrote:

Money laundering is generally accepted to refer to the process of concealing the source of illegally obtained money.

Unfortunately in UK law 'Money Laundering' is defined in such a way that it need not involve either money or laundering.  For example there was the case of a man, Mr Whitwam, who was stopped with a child's 50cc motorcycle which had earlier been stolen.  He was convicted of 'money laundering' contrary to s329 Proceeds of Crime Act 2002 because he had physical possession of an asset which he knew or suspected to be a benefit of a crime.

But I do agree that where there has been no crime there can be no money laundering.

It is possible that money is being invoiced from overseas as part of either a fraud on the company itself (for example by way of a bogus invoice for non-existent goods or services) or to falsely create a purported expense for tax purposes as part of a scheme to evade UK taxes on company profits.  But it is equally possible that the payment overseas is entirely genuine.

I know one law enforcement officer who holds the view that overseas bank accounts are held by UK residents for only three reasons:  either to hide money from the police or to hide money from the taxman or to hide money from 'the missus'!

David

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I think only

an external accountant has a duty to report a suspicion.

but professionally if you think it is wrong then you should not be associated with it and perhaps get another JOB,, not much help I know ! 

you certainly do not want to be seen as a party to the transaction if you think it is dodgy....

However the payment to an offshore bank account is in itself not a crime.

 

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Woah!

My reading of the original posting is that the OP is an employee in an accounting function within a company which is not a firm of accountants.

So he is not an EXTERNAL accountant and, very likely, the employer's activities do not fall within the 'regulated sector' (as to which see Reg 3 ML Regulations 2007).

Assuming that he is employed in England & Wales then he has an obligation to report only (a) suspicions related to possible terrorism related property offences, or (b) his OWN involvement in money laundering.

I do not think there is any suggestion of a connection to terrorism here.

He will need to report if his own involvement amounts to his commission of a money laundering offence - for example if he enters into or becomes concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property by another, contrary to s328 PoCA 2002.

I think it would be a bit too much of a stretch, based on the information we have, to say that he is himself committing a money laundering offence.

David

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context

Like several of the other posters I wouldn't say there is anything to suggest ML, however from the wording of the question implies the poster thinks the transactions are "suspicious" in some form.

As a former Finance Director, I occasionally would ask members of my team to make payments without giving full information about what the payment was for. I would always though send the relevant person an email to show that the instructions/authorisation had come from me. The reasons for not being explicit more often than not fell into the category of obtaining advice about a confidential matter such as a potential acquisition, or consultancy before a restructuring.

The questions I would be asking based on the original post would be

Who produced the invoice(s) the receiving company or your company?

How large are the invoice(s)? How does this compare to other (overhead presumably?) invoice(s)?

What account is the invoice being coded to?

Which country is the off shore account in? Does it seem likely that the your company might have or begin to have dealings in that country?

Does the IC process mean that other senior employees/Directors have approved the invoice?

If you're still unsure, I'd be more inclined to confirm the invoice with another Director (probably the MD or FD in this case) on the basis "I just want to check it's ok because we don't normally make payments like these", I don't think you should be "challenging" anyone though.

 

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What is money laundering

Hi
I need bit of advice from you if you can help??

I needed some extra bit of cash to invest into my business. I recently started a new business in UK and currently working for a Retail company.
In order to obtained extra cash I have used my credit cards to purcahse good in my retail store and returned these goods into my debit card.

Now my employer is allegating me for doing 'Money Laundering'. IS it money laundering?

As All I was thining that I am not doing any crime, buying goods and returning them back to my cards.

Can someone Please help?

Thanks

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