Do I need to report to NCIS?

Do I need to report to NCIS?

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I took on a client in September 2002. The client is in catering business. However we have never produced any accounts for her, partly because her records are incomplete and partly due to our lack of time.

I met her only once at the beginning of our appointment. Since then we only communicate by correspondence and phone.

About 3 weeks ago. I received a phone call from the police asking me whether I was acting as her accountants. I replied yes. The police told me that they were investigating our client about money laundering offences but did not give me any details. I then telephoned my client and told her that I had been contacted by the police about her affairs. She told me that she had been involved in property development and over the last 2-3 years she had bought and sold seven properties. She gave me all the details of the properties involved.

About a week ago, I received a Production Order issued at a Crown Court for me to produce all files, documents etc. to the police. I phoned my client again and told her that I was ordered to forward all my files to the police. She asked me to send copies of my files/documents to her Solicitors. I promised her without much thought.

My question is:

1) When I was first contacted by the police, I phoned my client and told her about the investiagtion. Does this amount a "tipping off"?

2) If I do send copies of my files to her Solicitors, again is this a "tipping off"?

3) Do I still need to report this to NCIS since the police has already known this case?

4) If I am to resign to act as her accountants now, can I return all her records (including my files) to her?

5) Should I also notify my PII insurer?

Your advice will be greatly appreciated.

Anonymous

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By User deleted
12th Apr 2006 10:54

Thank you
David, thank you for your advice. I will of course forward my whole file to the police as directed under the Production Order. What makes me feel uncomfortable is that the client requests for a copy. I know I was naive to promise her in the first place. Now I will have to explain to her why I can't do so without indulge too much details. Thanks once again for your valuable advice.

Anonymous

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By edwincrump
12th Apr 2006 14:21

Client's right to copy of file
I believe that irrespective of whether data is held electronically,under the Data Protection Act an individual is entitled
to a copy of his file upon payment of(I think)only £10.I don't see that an accountant can therefore refuse to supply a copy unless the order from the police overrules the Data Protection Act

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David Winch
By David Winch
11th Apr 2006 18:18

Not best practice!

Anonymous -

Neither you nor the police have followed best practice here!

Firstly, the police should not simply have telephoned you to chat about their investigations concerning your client's suspected money laundering.

Secondly, you should not have contacted your client and told her of the telephone call - nor of the production order.

You do not say how you received the production order. Best practice is for a police officer to visit you and hand it to you in person. At the same time he should tell you that you must not tell your client of the existence of the order, or the police enquiries.

In the event you may actually have received the production order by post or fax.

By contacting the client you have risked being prosecuted yourself under section 342 Proceeds of Crime Act 2002, "prejudicing an investigation". (This is a bit similar to "tipping off" under section 333 - and the penalty is the same.)

Note that you must not alter, destroy, conceal, dispose of, or falsify any documents or evidence. That also would be an offence under section 342.

You are obliged to hand over to the police the material in your possession or under your control (including, for example, files in storage offsite) specified in the order. This means not just the client's records which you would supply to HMR&C, but also all your own files (correspondence, working papers, copy emails, etc).

I think you should take legal advice from a solicitor with experience in these matters (NOT your client's solicitor, of course).

However the fact that you have been served with a production order does not mean that you are yourself suspected of a money laundering offence.

Don't forget that the police investigation may be about something other than the things which the client has now told you about!

Because of space constraints upon replies I shall deal with your 5 specific points in a separate posting.

If you are an MLRO you can get confidential one-to-one email support, information and NewsAlerts from my website www.mlrosupport.co.uk.

David
[email protected]

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David Winch
By David Winch
11th Apr 2006 18:40

Your 5 specific points

See above and below for general comments. In reply to your specific points:

1) You may have committed an offence under section 342, "prejudicing an investigation", see my comments below. Seek legal advice from a solicitor experienced in this field.

2) Again, seek legal advice. The information which you send to the police will include some not previously seen by the client. To copy this to the client (or her solicitor) may, in the circumstances, amount to a criminal offence under section 342 (see below).

3) Yes. Submit a 'limited intelligence value' report to SOCA (which has replaced NCIS).

4) Absolutely not! You must send them to the police under the production order. Sending them to the client instead of to the police could have very serious consequences (see above).

5) I think it would be wise to notify your insurer.

David

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David Winch
By David Winch
12th Apr 2006 06:02

What might we be dealing with here?

I don't want to alarm you unnecessarily - and of course your client is presumed innocent.

However you should be aware that police resources are extremely limited. In consequence they try to avoid spending time on trivial matters.

This, in the opinion of the police, is not a trivial matter.

I have seen these procedures used in cases of (1) the girlfriend of a man accused (and later convicted) of dealing in over £½ million of drugs, (2) a man thought to be a member of a gang which carried out an armed robbery which netted over £1 million, and (3) in a case of systematic mortgage fraud.

You don't know what you don't know - but this is not about whether your client has submitted accurate tax returns!

The police are treating you as one of the 'good guys'. Most people they deal with they believe to be 'bad guys'.

If you were to pass your files to your client instead of to the police, as you mention in point 4, the police would ask themselves "Why is the accountant working with the 'bad guys' and against the courts and the police?" and "What is in the accountant's files that he is so desperate to hide from us?".

Their attitude towards you would change dramatically. You could be prosecuted. You could go to prison.

Do read up about Paul Martin Warren (you need to scroll well down the page to find where his item starts and then continue on to the following page) the FCA sentenced to 12 months imprisonment plus £200,000 costs following an alleged investment fraud by a client which was, in part, routed through his firm's client bank account. (He was subsequently excluded from the ICAEW.)

Tread carefully! Get good legal advice!

Finally, remember that whilst the production order requires you to produce documents and records it does not oblige you to answer questions. You still have a duty of confidentiality towards your client. If the police ask you questions about your client's affairs you should simply explain that you are prevented from answering by your duty of client confidentiality. (But DO EXPLAIN THIS - don't simply remain silent!)

It is possible (although unlikely, in my opinion) that you may have documents which are legally privileged. If so, you should not send them to the police under the production order. However do not withhold anything from the police unless you have legal advice from your own solicitor (preferably confirmed in writing) that this would be the correct thing to do.

In due course the police could obtain a further court order obliging you to answer questions, but it sounds as if they have not yet done so. If they obtain such an order it will over-rule client confidentiality and you must then answer their questions.

Good luck!

David

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Stephen Quay
By squay
12th Apr 2006 14:31

Who Pays?
So the accountant obtains legal advice from an experienced solicitor and in doing so incurs costs. He/she also incurs loss of fee earning time in dealing with this whole matter. Who pays? Can the client be billed with a realistic hope of getting paid or is it just written off? Anyone out there had experience of this?

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David Winch
By David Winch
12th Apr 2006 14:34

Data Protection Act

There are exemptions from the usual Data Protection Act provisions in relation to the prevention and detection of crime and the prosecution of offenders.

David

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David Winch
By David Winch
12th Apr 2006 14:36

Who pays

The accountant pays. The good news is that good advice at an early stage can help him avoid getting into a much worse mess later!

David

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