New money laundering regulations - know your responsibilities
The Money Laundering Regulations 2007 (MLRs2007) will come into effect from 15 December 2007. From that date, any business defined as a High Value Dealer (HVD) will need to register with HM Revenue and Customs before being able to carry out a HVD business.
Any HVD business needing to register at HMRC will have to pay a fee to be registered. This is payable for each of the premises from which trading takes place.
A HVD business is one which is prepared to accept payment of at least €15,000 by way of cash or travellers cheques (or equivalent in any currency) for goods, whether in a single transaction or in instalments. Typical examples are auctioneers, car dealers, jewellers and antique dealers but the new Regulations apply to all agents, wholesalers and retailers dealing in cash.
The purpose of the new Regulations is to prevent money laundering and terrorist financing. The Regulations therefore include requirements for relevant businesses to establish and maintain appropriate policies and procedures relating to customer due diligence, reporting, record keeping and management of MLR compliance matters, including circumstances in which suspicious activity to the Serious Organised Crime Agency (SOCA). There are civil and criminal sanctions for failure to comply with MLR2007.
Customer due diligence is the process by which the business obtains confirmation that a new or existing customer is who they say they are and applies to both individuals and organisations. Having this information and making use of it underpins all anti-money laundering procedures and is the most effective weapon against a business being used to launder the proceeds of crime. In addition to minimising the risk of being used for illicit activities, it provides protection against fraud, enables suspicious activity to be recognised and protects individual businesses from reputational and financial risks. Nevertheless, the new Regulations are expected to widen the range of businesses falling within the scope of MLR2007 and place an additional compliance and record keeping burden on businesses who may not have the necessary resources and experience to be able to deal with the red tape obligations arising. Of course, an easy solution is for any business potentially at risk of falling under MLR2007, to agree on a procedure not to accept more than €15,000 (or equivalent) of cash from any customer and to effectively communicate this policy to all relevant employees.
If you require any further information or advice on this matter, please contact your usual Wilkins Kennedy partner.
The HMRC website at www.hmrc.gov.uk has a section dedicated to MLR2007 and provides useful guidance for businesses which may be affected by these new Regulations, including some useful questions and answers.
