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Accountant ignores MLR warnings

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19th Oct 2016
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A former chartered accountant who “stubbornly refused” to upkeep Money Laundering Regulation (MLR) due diligence has received a £3,094 penalty.

A recent first tier tribunal [TC/2015/04408] heard how Neil Bevan, owner of N Bevan Ltd (NBL), was unable to provide HMRC with a record of the checks he'd undertaken on his clients during a routine compliance visit, and afterwards, ignored HMRC warnings to enforce a more robust system  

Bevan, who has been practising for 40 years, is not a member of a professional body so he registered with HMRC and followed their regulations. But when his MLR due dilligence was scrutinised, he argued that their CCAB guidance was not the law.

During the meeting, Bevan clutched at a number of excuses including a broken printer as the reason why he couldn’t provide HMRC officer Andrew Glew with a list of the firm’s clients.

Bevan told Glew that he relied on HMRC’s online tax system as, effectively, an electronic record of information on his clients. So, he didn’t keep any records, since paperwork was returned to the client. In fact, Bevan claimed that all of his clients’ relevant information was “in his head” as he had known them for many years.

Yearly meetings were enough

Due to these longstanding relationships, he believed his yearly client meetings and checking that their online information through the tax agent self assessment system remained unchanged was enough to fulfil the identity verification and risk assessment required.

But when pressed by Glew, he was unable to provide evidence of identity of the firm’s three main clients other than outdated correspondence from 2004.

But in his oral evidence, Bevan asserted that information demonstrating he had established his clients’ identities was in his house. At this point, the judge pointed out that they “prefer officer Glew’s evidence”.

Later, Bevan argued in a letter to the Revenue that he did assess the risk of businesses being used by criminals but didn’t expand on how - but he did include the client’s records he was unable to print in his meeting.

HMRC followed this with a warning letter, giving Bevan the opportunity to correct the weaknesses they identified. But when HMRC returned Bevan informed the officers that he had not changed any of his customer due diligence processes, believing those he already had in place were sufficient enough.

The judge said that although Bevan was correct to say CCAB guidance was not the law he still “stubbornly refused” to provide an alternative method of complying with the regulations “without justification”.

Could have been avoided

In conclusion, the judged said: “This is a sorry outcome for NBL and one that could easily have been avoided had it not, for no good reason, ignored HMRC’s warnings about the inadequacy of its policies and procedures and what it might do to address them.

“NBL would be well advised now to read the CCAB guidance and develop policies and procedures the take account of that guidance.”

Because the actual threat of money laundering was limited, the judge mitigated HMRC’s originally enforced penalty of £3,750 by 20%, resulting in the “appropriate penalty” to be £3,094.

Replies (4)

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By ArsalanShah
20th Oct 2016 13:45

Lesson learned or may be not.....

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By johnjenkins
21st Oct 2016 11:53

This is the first case of this kind that I have heard about.
I can understand why the judge was worried. Reading between the lines I think that this is more of a case of "you can't tell me what to do as I've been in the industry for 40 years" than Bevan not actually doing any risk assessments. Or perhaps there are Accountants like this around.

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By Janski
21st Oct 2016 12:32

Reinforces that the MLR requirements must be met. My governing body reviewed my practices' procedures and only found that my engagement letter needed updating which I did straight away, so passed the review. Why argue? It's the law! Do it or find another trade.

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Chris M
By mr. mischief
23rd Oct 2016 08:37

In my view you should not even be dealing with HMRC unless you are fully prepared and willing to do a lot of pointless box-ticking. Dealing with HMRC is by a country mile the worst part of the job due to their general sloppiness and lack of professionalism, but it's a necessary evil so just tick the boxes NBL.

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