When working in the domain of Bookkeeping you will of course be made aware of the various rules and regulations you must adhere to. One of the most important topics is Money Laundering. This article outlines what this means, what the laws are and how to stay within the law.
Money Laundering
Working as a bookkeeper you will be governed by the Money Laundering Regulations 2003 (MLR). Recent legislation has affected those businesses and individuals that operate in what is termed ‘the regulated sector’ and which are ‘regulated businesses’. Included in both these terms are bookkeepers.
What is Money Laundering?
The term money laundering has been in existence for many years and originally referred to the process whereby the proceeds of an illegal act (initially relating, in the main to drug trafficking offences) were concealed by a process whereby these proceeds were introduced into the legitimate financial system and emerged as clean monies. A more formal definition of money laundering is: ‘the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so they can be retained
permanently or recycled into further criminal enterprises’.
Today in the United Kingdom the proceeds of ALL crimes are within the money laundering legislation. In addition, the legislation not only made it a criminal offence to carry out the particular crime, but extended the offences to include the non-disclosure of such offences to the relevant authorities and informing the offender that you had knowledge or suspicions of an offence (known as ‘tipping off’). The penalties resulting from money laundering offences are wide and include the seizure of the proceeds of crime, unlimited fines and in the most serious offences imprisonment.
What is the legislation governing money laundering?
The Proceeds of Crime Act 2002 (POCA). This relates to businesses that operate in the ‘regulated sector’ to
disclose any actual knowledge or serious suspicions of a money laundering offence to the appropriate authority, which is the Serious Organised Crime Agency (SOCA).
The Money Laundering Regulations 2003 (MLR)
This legislation sets out regulations which those engaged in relevant businesses must follow in relation to the prevention and disclosure of money laundering. The main regulations concern: Identifying New Clients,
Keeping records of client identification evidence, Creating and maintaining systems to detect and prevent money laundering.
The Money Laundering Offences
- Concealing
An offence is committed if you conceal, disguise, convert, transfer or remove criminal property from England and Wales or from Scotland or from Northern Ireland.
- Arrangements
An offence is committed if a person enters into or becomes concerned in arrangement which he knows or suspects facilitates the acquisition, retention, use or control of criminal property by or on behalf of a third party.
- Acquisition, use and possession
A person commits an offence if he acquires uses or has possession of criminal property.
- Failure to disclose money laundering
It is an offence not to report money laundering activity.
- Tipping Off
It is an offence to warn people that you know about their money
laundering activities and have reported them.
What does this mean to me?
Working as a bookkeeper/ accountant you can come across various money laundering activities such as tax and vat avoidance. The money laundering regulations mean that you would have to report any such activity to come across. Remember it is an offence not to report!!
This article has been put together by the distance learning organisation Start Learning who are experts in home study.
If you want to find out more about Total Bookkeeping or many other distance learning courses please browse their website: http://www.start-learning.co.uk
Kerrana McAvoy
Academic Director – Start Learning
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