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Money laundering reforms will sting advisers

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20th Feb 2012
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Plans to simplify money laundering regulations could rebound on accountants who could face increased and possibly unlimited penalties from their professional bodies, warned David Winch of MLRO Support.

The leader of AccountingWEB’s Money laundering and crime discussion group sounded the warning in a recent interview with TAXtv.

As part of the government’s campaign to reduce administrative burdens on business, Chancellor George Osborne promised to simplify Money Laundering regulations in his March Budget speech and since then consultation has moved forward around the proposals, which include repealing the criminal sanctions for 36 breaches of the regulations such as failing to train staff, failing to check identitites adequately and so on. Criminal charges would still be brought for more serious violations such failing to make a report, destroying documents or tipping off a suspected money launderer.

However, under the proposed reforms less onerous civil breaches by accountants would be policed by their professional bodies.

Casting an eye on HMRC’s evolving strategy around penalties, Winch told TAXtv’s Giles Mooney, “We’re now in a situation where various professional bodies can make a profit. [They will be] more motivated to take a look at accountants and say, ‘Can you show us that staff are trained and take money laundering seriously?’

“I’m sure professional bodies will be fair, but the onus is on them to make sure their members are complying with the laws. And the professional bodies will have to show the government that they have been doing it. So perhaps there will be more penalties for accountants failing to have training and so on.”

Winch warned that accountants and their teams need to have a “back of mind alertness” to the possibility that something might be amiss with their clients, and do a little digging to satisfy their suspicions. If an accountant has one dodgy client, they may accumulate more and find themselves being asked very uncomfortable questions if the police get involved.

Just such a scenario cropped up in the Money laundering and crime discussion group, where an adviser was arrested by police by police after a client accused them of misappropriating VAT repayments. At that point the police would have viewed a report to SOCA as witness intimidation and even if innocent of any crime, the adviser was on shaky ground for not raising any suspicions earlier.

The amendments to the money laundering regulations are being prepared to tie in with an updated European money laundering directive. The Financial Action Task Force published its proposals on Thursday 16 February (thanks to discussion group member steveoneil for alerting us) and will be incorporated into a draft EU directive by the autumn 2012. Plans for swift implementation in Europe and the UK would mean any changes to the Money Laundering Regulations 2007 would take effect during 2013 or 2014.

The TAXtv interview with MLRO Support’s David Winch is available to view for free as part of a campaign to promote a new training service by the two organisations. Subscriptions to TAXtv are available from AccountingWEB for £99 a year.

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By The Black Knight
21st Feb 2012 11:04

Another stick to beat us with

How about the red tape facing accountancy practices that are wasting their time on this instead of giving the advice that will save the U.K. economy from sinking.

I try and put friday aside to do some work !

Absolutely no notice is taken of money laundering reports.  SOCA would appear to be another filing organisation like Companies House.

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