Money Transfer Business

Money Transfer Business

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Hi there

I just took on new client, who runs money transfer agency.

His ex-accountants have included all money received from his clients as his turnover, while I have always included only ‘commission’ and ‘exchange gains (or losses)’ cumulatively as their sales. Do I understand correctly? Or I have been doing it wrong?

Best wishes 

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By DMGbus
25th Jan 2016 13:29

Cheque cashing

Some years ago I used to prepare the accounts of a cheque cashing business.  The declared turnover was the commission earned, not the value of cheques received/handled.

I seem to vaguely recall that at the time of the .com boom some sort of online travel agency missed targets and so tried to up it's perceived size by declaring money received as turnover when it was in fact only an agent handling money and receiving commission from tour operators.

 

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By Duggimon
25th Jan 2016 14:10

You're right

We act for a number of shops who operate paypoint, where utility bills can be paid at the shop till. In those cases the income is, as with your example and the cheque cashing business, the commission, not the full amount taken in.

It's not money paid to them for goods or services rendered, it's not turnover, only what they earn for doing their job is turnover, the money changed is incidental.

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David Winch
By David Winch
25th Jan 2016 14:20

Turnover - money laundering

I agree with the other posters that the commission (not the gross monies handled) is the turnover.

Money transfer businesses attract money launderers for obvious reasons.  The money transmitter business is itself within the 'regulated sector' for MLR 2007 purposes & subject to supervision.

As its accountant you are of course also within the 'regulated sector' & are obliged to report any suspicions you may have, based on information which has come to you, of any money laundering through the business.

If it does turn out to be the case that customers of the business are laundering money on a significant scale & this has not been reported to the authorities not only could your client be facing prosecution, so could you.

So handle this with care & an awareness of the money laundering risks.

David

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