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Potential SOCA issue

Potential SOCA issue

A client has had a cash shortfall of 20 to 30k in the last 2 years (mainly cash retail business). It was explained away last year by 'family gave me cash to help through these difficult times'.

The same has occured this year.

I have got the client to sign a statment to that effect.

Does anyone feel a SOCA report is required?

Any comments very much appreciated.

Thank you very much.


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03rd Jun 2011 14:06

Depends on suspicion

 It is a difficult one as you need to be sure of why there is a suspicion. When you say a shortfall presumably money is being banked but no sale has been declared? 

What is the nature of suspicion, is the money going in with other normal banking? Is it transfers from another account (joint or family member). 

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By geoffmw
03rd Jun 2011 14:32

I read this differently

i.e. more cash has been spent than appears to be available from cash received for sales and any cash drawn from bank.

Is there perhaps a duplication of drawings and an item called proprietor's wages and therefore no cash shortage.


OP please be more specifiuc as to the nature of the shortage.


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03rd Jun 2011 14:59


The bottom line is - are you suspicious?

If so you should report, if not then don't. Personally I would say something clearly isnt right, but I'd want to dog deeper before I acted.


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03rd Jun 2011 15:22

thanks for the quick replies.

Yes - pmnts from bank and cash pmnts exceed takings.

Sadly client has terminal illness - not able to work so hard - says family is giving him cash for cash purchase etc...

Thanks for your input - its been helpful.

Im gonna leave this one.


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04th Jun 2011 00:02

The possibilities

It seems to me that the possibilities here include:


The monies are in reality unrecorded sales income of the businessThe monies are in reality unrecorded income of the client from some other sourceThe monies are in reality from undisclosed savings held by the clientThe monies are gifts or loans from legitimate funds of relatives / friendsThe monies are gifts or loans from illegitimate funds of relatives / friends

You might be able to form an opinion regarding item 1 by looking at the gross profit percentage of the business.  If the GP% seems unrealistically low then you may need to ask the client why this is.

You can consider whether there is any evidence to suggest 2 or 3.

You may already have asked the client whom the loans or gifts are from and, in turn (if he knows) where the donor(s) / lender(s) got the funds from.  That will shed some light on 4 and 5.

In effect, if you suspect 1, 2, 3 or 5 you need to consider making a report to SOCA.

You also, of course, need to consider how you would respond to an enquiry from HMRC if one were received (particularly as an enquiry could materialise after your client has died).

But it is entirely possible that, as far as reporting to SOCA is concerned, you may conclude that you do not know or suspect, or have reasonable grounds to know or suspect, money laundering by anyone - and so no report to SOCA is required.  In that event however I would suggest that you make a file note indicating what information / evidence you have and why you have decided that (nothwithstanding significant capital introduced each year) you have decided that a report to SOCA is not required.

If you have an MLRO in your firm (who is someone other than yourself) I would suggest you discuss the position with him and send him a copy of your file note for his retention.


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