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How Covid-19 will affect AML

AccountingWEB’s Richard Hattersley caught up with money laundering expert David Winch to talk all things AML and Covid-19.

23rd Jun 2020
Editor AccountingWEB
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Money laundering

In May the National Crime Agency (NCA) issued a bit of new guidance on making Suspicious Activity Reports. Included in the guidance is some mention of Covid-19 support scheme fraud.

To discuss the latest developments and updated glossary codes, AccountingWEB caught up with David Winch, the director at Bartfields Forensic Accountants.

* * *

Hi David, how are you keeping? I guess crime continues in a pandemic.

David Winch DW: Well yes, but the work of the criminal courts has been severely disrupted. Normally Magistrates’ and Crown Courts are full of people milling about, waiting to get their cases heard. That’s not happening now, and of course, the idea of 12 jury members huddled up together is a non-starter in terms of social distancing.

The courts are slowly reconfiguring themselves so that they can begin to operate again but at a much-reduced level. There’s going to be a huge backlog of cases later in the year – and terrific ‘bargains’ available to defendants in return for a guilty plea.

Bargains? How will that work?

Well, much like settling an enquiry with HMRC, a defendant who offers a guilty plea to a lesser offence may find the prosecution will accept that to avoid the need for a trial. The defendant gets a double advantage – conviction of a lesser offence and credit for a guilty plea, meaning a significantly reduced sentence.

And will COVID-19 generate additional criminal work?

Yes, we are expecting criminal prosecutions for frauds related to COVID-19. There will be fraudsters selling fake miracle medicines but, more relevant to accountants, the government’s largesse with grants and loans will attract professional fraudsters and will tempt the generally honest to make dishonest claims and applications.

That leads us to Suspicious Activity Reports (SARs), which AccountingWEB members so love to hate.

Yes and there have been some developments there. The National Crime Agency has produced an updated list of Glossary Codes. These are the double-X codes which the NCA encourage us all to place at the head of the narrative part of a SAR. These codes are particularly useful to the NCA in rapidly classifying and searching SARs.

Don’t tell me there’s a special code for Covid-19 fraud?

There certainly is – XXCVDXX is a code to use for any COVID-19 related suspicion, along with XXGPSXX where the fraud relates to a Government Priority Scheme, such as the supported loans, or XXSATXX where the fraud relates to the Self Assessment Tax scheme, such as furlough funding. I think you can see where these codes come from!

And the XXSATXX code would apply to ordinary pre-pandemic tax evasion too.

DW: No, for ordinary tax fraud you would use XXTEUKXX – Tax Evasion UK based – or XXTEOSXX – Tax Evasion Off Shore, probably along with XXF4XX for personal tax evasion or XXF3XX for corporate tax evasion.

Thank you David, you’ve opened my eyes to the XX world of NCA Glossary Codes.

DW: I can see you’re excited! There’s a whole lot more in the May 2020 issue of the NCA SAR Glossary Codes and Reporting Routes booklet online.

Do you have a favourite code?

DW: I do think XXGVTXX looks like it could be popular! It’s a special code for consent requests where the amount involved is less that £3,000 and there is no existing law enforcement interest. I don’t know where “GVT” comes from but to me, it reads a bit like “BIN”! Maybe I’m getting a bit cynical.

Thanks again David, I’ll let you get back to your life of crime.

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